Garmin Aktie

Ladies and gentlemen, thank you for joining us, and welcome to the 2026 Annual General Meeting of Shareholders of Garmin Limited. Thank you for being here. I will now hand the conference over to Josh Maxfield, Chairman of the Annual General Meeting, Vice President and Secretary, Garmin Limited. Josh, please go ahead.

Ladies and gentlemen, may I have your attention, please. We would like to start the annual meeting. Good afternoon to those here in Zurich, and welcome to those listening to the webcast. I am Josh Maxfield, Vice President, General Counsel and Secretary of Garmin Limited. I am acting as Chairman of this 2026 Annual General Meeting of Garmin Limited pursuant to Article 16 of the company's Articles of Association.

I would like to extend a special welcome to the members of our Board of Directors and our executive management who are present online. Before we commence the formal business of this meeting, I would like to recognize our President and CEO, Cliff Pemble, who will review our achievements in 2025 and the first quarter of 2026.

Thank you, Josh, and welcome to those who are joining from Zurich and to our shareholders who are attending this webcast. 2025 was another remarkable year of achievement for Garmin.

Revenue increased 15% to $7.25 billion, a new record with growth and record revenue in every segment. Operating margin expanded to 25.9%, resulting in record operating income of $1.88 billion, an 18% increase over 2024. We're off to a great start in 2026, achieving strong double-digit growth in both revenue and operating income during the opening quarter of the year in a continuation of the positive business trends we've been experiencing over the longer term.

Throughout the year and into 2026, we launched many new products and received numerous awards and recognition across our diverse business segments. We were ranked #1 in product support for the 22nd consecutive year by Aviation International News and for the 21st consecutive year by Professional Pilot Magazine.

We were named Manufacturer of the Year by the National Marine Electronics Association for the 11th consecutive year with 8 Product of Excellence awards, and we were recognized for the third consecutive year as the most innovative marine company by Soundings Trade Only, a leading trade publication for the recreational boating industry.

We received 5 innovation awards for groundbreaking achievements in technology across various product categories at the 2026 Consumer Electronics Show and the Phoenix 8 Pro was officially recognized as the best connected device at the 2026 Mobile World Congress in Barcelona.

These awards and many more are a testament to our associates' passion and commitment to serving our customers and each other. I'm proud of our accomplishments in 2025 and want to thank Garmin's amazing associates worldwide for their tremendous dedication and effort.

With a strong product line and a great team, I'm confident we are well positioned for long-term success. Thank you again for joining today, and I'll now turn the meeting back over to Josh and Zurich.

Thank you, Cliff. Present at this meeting is Mr. Yasha Price, who is a partner in the law firm of Versch & Gering LLP, which firm was elected as independent voting rights representative by shareholder vote at our 2025 Annual General Meeting.

Also present are Mr. Roger Mueller and Ms. Michaela Held of Ernst & Young Limited, Garmin Limited statutory auditor. Ms. Vera Negali and Mr. Florian Schweighofer, both lawyers in the law firm, Bar & Karrer AG; and Mr. Paul Cassett, Principal Counsel at Garmin. I have appointed Ms. Negali as vote counter and Mr. Cassett as Secretary of the meeting to keep the minutes.

I will now report on the organization of this Annual General Meeting and the presence of a quorum. The Board of Directors has invited shareholders to this Annual General Meeting in accordance with Swiss law and our Articles of Association by way of a proxy statement filed with the United States Securities and Exchange Commission.

The invitation to this Annual General Meeting contains the agenda items and the proposals of the Board of Directors. No shareholder has requested the inclusion of an item or proposal on the agenda of today's meeting. The Board of Directors has fixed the close of business on April 10, 2026, as the record date for this meeting.

Shareholders registered in our share register with voting rights at the close of business U.S. Eastern Time on the record date are entitled to attend, vote or grant a proxy to vote at this meeting. In accordance with Swiss law, any additional shareholders who registered in our share register at the close of business U.S. Eastern Time on May 22, 2026, are also entitled to attend, vote or grant -- proxy to vote at this meeting.

Shareholders who are registered in Garmin's share register on May 22, 2026, but have sold their shares before the meeting date are not entitled to exercise voting rights with respect to the matters to be resolved upon at this meeting. A copy of the Garmin Limited 2025 annual report to shareholders, which contains the consolidated and statutory financial statements of Garmin Limited for the fiscal year ended December 27, 2025, and the auditor's reports have been made available on Garmin's website 20 calendar days before the meeting.

I have received an affidavit from Computershare Communication Services, the company's mailing agent, stating that notice of this Annual General Meeting, together with the proxy statement, proxy card, annual report and return envelope, were duly mailed by Computershare Communication Services to all shareholders of record as of the applicable record date who elected to receive notice by mail.

At the request of the independent voting rights representative, Versch & Gering LLP, and in accordance with Article 689c, Paragraph 5 of the Swiss Code of Obligations, I inform all shareholders present or represented at this meeting that Versch & Gering shared with us the aggregate for, against and abstain voting instructions of shareholders of record on each proposal on today's agenda and therefore, not -- each proposal on today's agenda today and therefore, not earlier than 3 business days before the date of this meeting.

Each proposal at this annual meeting requires the affirmative vote of a majority of the votes cast, excluding unmarked, invalid and non-exercisable votes and abstentions. We will now ascertain whether a quorum is present. Under Garmin's Articles of Association, the quorum for a general meeting of shareholders is the presence in person or by proxy of at least a majority of the total number of shares entitled to vote at a general meeting of the shareholders.

As of May 22, 2026, there were 192,822,422 shares of Garmin Limited issued and outstanding which number excludes 2,078,543 treasury shares. Ms. Negali, please could you report the number of shares represented at this meeting?

There are present or represented at this Annual General Meeting 167,76,275 shares or 86.65% of the issued and outstanding shares of Garmin Limited entitled to vote at this general meeting. All of such shares are represented by the independent voting rights representative.

Thank you. A majority of the shares entitled to vote at this meeting is represented. Therefore, a quorum is present, and today's meeting is validly constituted. We will now proceed with the formal business of this meeting. We will follow the order of business listed in the agenda. The first item on the agenda is the proposal for approval of Garmin's 2025 annual report, including the consolidated financial statements and the statutory financial statements of the company for the 2025 fiscal year.

Mr. Mueller and Ms. Held of Ernst & Young Limited have informed me that Ernst & Young Limited does not have anything to add to its audit reports. Ms. Negali, please could you report the voting results on this proposal?

Proposal 1, approval of the 2025 annual report has been approved with 99.97% of the votes cast.

Proposal 2 on the agenda is to approve the appropriation of available earnings. The full text of the proposal is contained in our proxy statement. Ms. Negali, please could you report the voting results on this proposal?

Proposal 2, the approval of the appropriation of available earnings has been approved with 99.92% of the votes cast.

Thank you. Proposal 3 on the agenda is the approval of a cash dividend in the aggregate amount of $4.20 per outstanding share to be paid out of the company's reserve from capital contribution in 4 equal installments on dates to be determined by the Board of Directors.

The full text of the proposal is contained in our proxy statement. Ernst & Young Limited has confirmed that in their opinion, the distribution proposed by the Board of Directors complies with Swiss law and the company's Articles of Association. Mr. Mueller and Ms. Held of Ernst & Young Limited have informed me that Ernst & Young Limited has no additional comments on its confirmation regarding the dividend proposal of the Board of Directors. Ms. Negali, please could you report the voting results on this proposal?

Proposal 3, approval of the payment of a cash dividend has been approved with 99.91% of the votes cast.

Thank you. Proposal 4 is to discharge the members of the company's Board of Directors and the executive management from liability for their activities during the 2025 fiscal year. It is customary for Swiss companies to include such a proposal on the agenda of their Annual General Meetings of Shareholders.

The discharge is only effective with respect to facts that have been disclosed to shareholders and only binds shareholders who either voted in favor of the proposal or who subsequently acquired shares with knowledge that shareholders have approved this proposal.

In accordance with Swiss law, members of the company's Board of Directors and the executive management cannot vote on the discharge of liability. So the number of votes cast on this proposal will be lower than on the other proposals. Ms. Negali, please could you report the voting results on this proposal?

Proposal 4, the discharge of the directors and the executive management from liability for activities during the 2025 fiscal year has been approved with 98.92% of the votes cast.

Thank you. Proposal 5 on the agenda is to reelect 6 directors. The Board of Directors has nominated Susan M. Ball, Jonathan C. Burrell, Joseph J. Hartnett, Min H. Kao, Catherine A. Lewis, and Clifton A. Pemble for reelection for a term extending until completion of the next Annual General Meeting. Voting is for each director nominee separately. Ms. Negali, please could you report the voting results on this proposal?

All 6 nominees to the Board of Directors pursuant to Proposal 5 have been elected with no less than 86.35% of the votes cast.

Proposal 6 on the agenda is the reelection of the Chairman. The Board has nominated Dr. Min Kao, who is currently the Executive Chairman of Garmin, for reelection as Chairman for a term extending until completion of the next Annual General Meeting. Ms. Negali, please could you report the voting results on this proposal?

Proposal 6, Dr. Min Kao's reelection as Chairman has been approved with 93.56% of the votes cast.

Thank you. Proposal 7 is the reelection of 4 members of the Compensation Committee of the Board of Directors. The Board has nominated Susan M. Ball, Jonathan C. Burrell, Joseph J. Hartnett, and Catherine A. Lewis for reelection as members of the Compensation Committee for a term extending until completion of the next Annual General Meeting. Voting is for each nominee separately. Ms. Negali, please could you report the voting results on this proposal?

All 4 nominees for reelection to the Compensation Committee pursuant to Proposal 7 have been elected with no less than 91.96% of the votes cast.

Proposal 8 on the agenda is the reelection of the independent voting rights representative. The Board has proposed that the New York law firm of Versch & Gering LLP be reelected as the independent voting rights representative for a term extending until completion of the next Annual General Meeting.

Versch & Gering has lawyers who have expertise and experience in Swiss as well as U.S. legal matters. Versch & Gering does not perform any other services for Garmin. Ms. Negali, please could you report the voting results on this proposal?

Proposal 8, reelection of the independent voting rights representative has been approved with 99.95% of the votes cast.

Thank you. Proposal 9 on the agenda is to ratify the appointment of Ernst & Young LLP as Garmin's independent registered public accounting firm for the 2026 fiscal year and to reelect Ernst & Young Limited as Garmin's statutory auditor for a further 1-year term. Ms. Negali, please could you report the voting results on this proposal?

Proposal 9, ratification of the appointment of Ernst & Young LLP as the company's independent public accountant and reelection of Ernst & Young Limited as statutory auditor has been approved with 96.65% of the votes cast.

Thank you. Proposal 10 on the agenda is an advisory resolution approving the compensation of Garmin's named executive officers as disclosed in the proxy statement for this Annual General Meeting. Ms. Negali, please could you report the voting results on this proposal?

Proposal 10, advisory vote on executive compensation has been approved with 95.35% of the votes cast.

Proposal 11 is an advisory vote on the 2025 Swiss statutory compensation report. Under Swiss law, we are required to prepare a separate Swiss statutory compensation report each year that contains specific items in a presentation format determined by Swiss law.

A copy of the Swiss statutory compensation report is contained in Annex 1 of the proxy statement for this meeting. Ms. Negali, please could you report the voting results on this proposal?

Proposal 11, advisory vote on the Swiss statutory compensation report has been approved with 95.84% of the votes cast.

Proposal 12 is a vote on the 2025 Swiss Statutory nonfinancial matters report. Under Swiss law, we are required to prepare a statutory nonfinancial matters report each year that contains items determined by Swiss law. A copy of the Swiss nonfinancial matters report is contained in Annex 2 of the proxy statement for this meeting. Ms. Negali, please could you report the voting results on this proposal?

Proposal 12, vote on the Swiss statutory nonfinancial matters report has been approved with 99.67% of the votes cast.

Thank you. Proposal 13 is to approve the fiscal year 2027 maximum aggregate compensation for the executive management as required by Swiss law and our Articles of Association and as disclosed in the proxy statement for this Annual General Meeting. Ms. Negali, please could you report the voting results on this proposal?

Proposal 13, binding vote to approve the fiscal year 2027 maximum aggregate compensation for the executive management has been approved with 98.1% of the votes cast.

Thank you. Proposal 14 is to approve the maximum aggregate compensation for the Board of Directors for the period between this 2026 Annual General Meeting and the 2027 Annual General Meeting as required by Swiss law and our Articles of Association and as disclosed in the proxy statement for this Annual General Meeting. Ms. Negali, please could you report the voting results on this proposal?

Proposal 14, binding vote to approve the maximum aggregate compensation for the Board for the period between the 2026 Annual General Meeting and the 2027 Annual General Meeting has been approved with 99.89% of the votes cast.

Thank you, Ms. Negali. I therefore confirm that all proposals have been approved by Garmin shareholders with the required majority. This concludes the results of the voting. The voting results on all proposals on the agenda will be filed with the SEC on a Form 8-K report within 4 business days of this meeting and will be available on Garmin's website.

This concludes the meeting. Thank you for your interest in Garmin. We wish you a good weekend and look forward to another successful year.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to the Garmin Limited First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. [Operator Instructions] I will now hand the conference over to Teri Seck, Director of Investor Relations. Teri, please go ahead.

Good morning. We'd like to welcome you to Garmin Limited's First Quarter 2026 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 related transcript will also be available on our website. This earnings call includes projections and other forward-looking statements regarding Garmin Limited and its business. 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.

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 filed with the Securities and Exchange Commission. Presenting on behalf of Garmin Ltd. 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. As announced earlier today, Garmin achieved remarkable financial results during the first quarter of 2026 in a continuation of the positive trends we've been experiencing over the long term. Consolidated revenue increased 14% to $1.75 billion, which is a new first quarter record. We achieved double-digit growth rates in 3 segments, and we experienced strength in many product categories across the business, including wearables, which were a significant contributor to consolidated growth.

Gross and operating margins expanded to 59.4% and 24.6%, respectively, resulting in record first quarter operating income of $432 million, up 30% year-over-year and pro forma EPS of $2.08, up 29% year-over-year. We're off to a great start in 2026, and we are very pleased with our results. As a reminder, the first quarter is typically the lowest seasonal quarter of our financial year. While the initial trends are encouraging, much of the year remains ahead. With this in mind and consistent with our typical practice, we are maintaining the guidance issued in February, and we'll provide updates as the year unfolds. Doug will discuss our financial results in greater detail in a few minutes, but first, I'll provide a few remarks on the performance of each business segment.

Starting with fitness. Revenue increased 42% to $547 million, which is a new first quarter record, driven by broad-based growth across all product categories, led by strong demand for advanced wearables. The primary driver of our performance is higher unit volumes, resulting in meaningful market share gains. Gross and operating margins were 62% and 29% respectively, resulting in operating income of $158 million. During the quarter, we launched the Varia RearVue 820, our brightest and most powerful radar tail light for cyclists. We expanded on-device messaging for select wearables with a new Connect IQ app that allows customers to read, reply and react to WhatsApp messages right from their wrist. We also announced that select wearables can now integrate with the highly acclaimed Natural Cycles birth control and Cycle Tracking app, empowering women to better understand and manage their reproductive health.

The Fitness segment has achieved outstanding performance over the long term, and we are very pleased with these results. As mentioned in February, we expect that the Fitness segment will be the strongest contributor to 2026 consolidated growth. Moving to Outdoor. Revenue decreased 5% to $418 million as we compared against a strong prior year quarter, which included the launch of the Instinct 3 smartwatch family. Fenix smartwatches performed well during the quarter, even considering the strong comparable from the prior year. Gross and operating margins were 67% and 28%, respectively, resulting in operating income of $119 million. During the quarter, we released the Approach G82 handheld GPS with a built-in launch monitor and the Approach J1, our first GPS watch specifically designed for junior golfers.

The Approach J1 was created by Garmin Associates who through their own experiences, recognize that aspiring junior golfers also want tools designed specifically for them to learn the game and improve performance. I'm proud of the way that our teams lean on their own experiences to bring unique, highly differentiated products to market. Also during the quarter, we launched the zumo XT3, our newest and most advanced motorcycle-focused GPS device and the Catalyst 2, a compact device for motorsports that helps high-performance drivers achieve faster times on the track.

Looking forward, we expect second quarter outdoor performance to be similar to that of Q1. We also expect to achieve stronger performance in the back half of the year due to the timing of product launches, resulting in improved full year growth when compared to 2025. Looking next at Aviation, revenue increased 18% to $264 million with growth contributions from both OEM and aftermarket product categories. Gross and operating margins were 75% and 27% respectively, resulting in operating income of $71 million. During the quarter, Daher unveiled their new TBM 980 single-engine turboprop aircraft featuring our G3000 PRIME avionics suite. Also, the Hondajet Elite II was certified by the FAA, becoming the first twin turbine business jet with Garmin Emergency Autoland technology. We are very pleased with the performance of aviation during the first quarter, and we expect to achieve solid growth throughout the remainder of the year.

Turning to the Marine segment. Revenue increased 11% to $355 million with broad-based growth across multiple product categories. Gross and operating margins were 56% and 26%, respectively, resulting in operating income of $91 million. The year-over-year margin compression was primarily due to higher tariff costs. During the quarter, we launched a new 360-degree scanning sonar with Spy pole, allowing anglers to see a bird's eye view of fish and underwater structure in every direction. Also during the quarter, we launched the quatix 8 Pro, our purpose-built nautical smartwatch with inReach technology for 2-way satellite and cellular connectivity. Our Marine segment is off to a very good start, and we believe we are on track to achieve growth consistent with the prior year.

And moving finally to the auto OEM segment. Revenue increased 1% to $170 million with growth primarily driven by infotainment programs. The segment operating loss narrowed to $6 million due to gross profit improvement and lower R&D expenses. We continue to achieve important milestones leading up to the launch of our next large-scale program with Mercedes-Benz, which we anticipate will drive significant growth starting in 2027 and beyond. As a reminder, we expect auto OEM revenue to decrease in 2026 as the BMW program has reached peak volumes and as certain legacy programs approach end of life.

We also expect the operating loss to narrow compared to 2025, although we are not expecting the segment to be profitable on a GAAP basis for the full year. Wrapping up, we continue to outperform expectations in a business environment characterized by economic whiplash and geopolitical uncertainty. Even in these challenging circumstances, we believe that great products and customer service always win. As strong as our product line currently is, we are planning to launch even more new products throughout the year, including some that represent new categories for Garmin. That concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug?

Thanks, Cliff. Good morning, everyone. I'll begin by reviewing our first quarter financial results, provide comments on the balance sheet, cash flow statement and taxes. We posted revenue of $1.753 billion for the first quarter, representing a 14% increase year-over-year. Gross margin was 59.4%, a 180 basis point increase from the prior year quarter. The increase was primarily due to favorable foreign currency impacts. Also for your reference, [we do not record] any benefit or receivable related to any potential refund of previously paid tariffs.

Operating expense as a percentage of sales was 34.8%, 110 basis point decrease. Operating income was $432 million, a 30% increase. Operating margin was 24.6%, a 290 basis point increase over the prior year quarter. Our GAAP EPS was $2.09, and pro forma EPS was $2.08. Next, we look at first quarter revenue by segment and geography. During the first quarter, we achieved double-digit growth in 3 of our 5 segments, led by the Fitness segment with 42% growth, followed by the Aviation segment with 18% growth, and Marine segment with 11% growth. By geography, we achieved growth in all 3 regions, led by 25% growth in APAC, followed by 15% growth in EMEA and 10% growth in Americas. EMEA and APAC regions benefited from favorable foreign currency impacts.

Looking next at operating expenses. First quarter operating expense increased by $59 million or 11%.

Research and development increased approximately $28 million. SG&A increased approximately $31 million compared to the prior year quarter. Both increases were primarily due to personnel-related expenses. A few highlights on the balance sheet, cash flow statement and taxes. We ended the quarter with cash and marketable securities of approximately $4.3 billion. Accounts receivable increased year-over-year due to strong sales, but decreased sequentially to $941 million following a seasonally strong fourth quarter. Inventory increased year-over-year and sequentially to approximately $1.9 billion.

During the first quarter of 2026, we generated free cash flow of $469 million, a $9 million increase from the prior year quarter. Capital expenditures for the first quarter of 2026 were $67 million, approximately $27 million higher than the prior year quarter. During the first quarter of 2026, we paid dividends of approximately $174 million, purchased $40 million of company stock. At quarter end, we had approximately $491 million remaining share repurchase program, which is authorized through December 2028. For an effective tax rate of 14.3%, which is comparable to 14.5% in the prior year quarter. This concludes our formal remarks. Ben, can you please open the line for Q&A.

[Operator Instructions] Your first question comes from the line of Joseph Cardoso with JPMorgan.

Maybe for my first question, can we just double-click on the performance, the strong performance in the quarter, both from a revenue and gross margin perspective. Cliff, it sounds like you're cautiously optimistic about the year despite kind of sticking to the typical full year guidance practice here. So maybe can you just touch on what is reinforcing that view, for example, how did demand momentum trend through the quarter and into 2Q to date? And then as you think about kind of the component cost and availability trends that we talked about last quarter, how did that trend through the quarter? And any change in view relative to your ability to navigate those dynamics versus 90 days ago? And then I have a follow-up.

Yes. Joe, I think, as I mentioned, we're very pleased with the initial results. Q1 does tend to be our lowest quarter. So we take it as a data point, but we definitely need to see more of the year unfold before we can really start to tweak what our 2026 results expectation will be. In terms of demand trends, they're consistent, continue to be very strong, like we saw in the prior year. Registration rates are continuing to be strong. We have not seen any impact from some of the recent developments in the Middle East and some of the conflict there when it comes to registration rates.

In fact, some of them are the strongest that we've been experiencing in the near term. So no worries there for the near term. Component costs wise, I would say that right now, we are not experiencing that in our current results. But keep in mind that component costs come through our inventory on the balance sheet. So consequently, as costs change, we'll see some of those go up as the year unfolds. We do have significant safety stock of some components that are under pricing pressure. So I would expect that 2026 is still going to be somewhat muted, and we'll start to see some effect in 2027.

Got it. Great color there, Cliff. And then maybe for my second one, and this is perhaps a bigger picture question. Over the last 6 months or so, we've seen a couple of private wearable companies complete successful funding rounds, disclose healthy revenue trends. And I think both are pursuing a somewhat different approach, both in terms of form factors and perhaps a more aggressive push into subscriptions or hardware-as-a-service models relative to incumbents like yourselves, so just given that, maybe just curious to hear your thoughts on how you're assessing the competitive implications just given that different approach being taken by these challengers. And maybe alternatively, do you see this as more of a market expanding dynamic potentially that could open the door for you to evolve how your own monetization approach is taken over time?

Yes. I would say that if there's anything that we've learned over the years is that customers want choices when it comes to devices, especially those that they wear. So that's what we're seeing, I think, in the market today is an expansion of options for people. And for us, again, we're -- we don't rule anything out. We're open to all kinds of devices and form factors in how we deploy our wearable sensor technology.

So I would say that, again, we see this as expanded opportunity for everyone. And I would point out that our results also reflect the general increase in the market and awareness and use of wearable devices for both fitness activity as well as wellness monitoring. In terms of subscription-based models, I would remind everyone that we have been expanding our role in subscription-based services for our products. In the services that we offer for those with Garmin Connect Plus as well as other services that we have in segments across the business. And so it's an area of enhanced focus for us as well.

Your next question comes from the line of Tim Long with Barclays. Tim?

This is Alyssa Shreves, on for Tim Long. Just a few quick questions. It sounded like you said strong demand for advanced wearables in the quarter. What are you seeing in the lower tier of the portfolio? Is there anything kind of -- are you seeing a dispersion in customer trends between the 2? And then I have a follow-up.

Yes. So when we talk about advanced wearables, we're really talking about those wearables that have GPS and the ability to download applications and that kind of thing. And really across our wearable price bands, all of those products pretty much qualify in that category. It's really the very basic kind of wearable bands like our vivosmart line that aren't considered advanced wearables, but those are a small part of our portfolio. So within advanced wearables, we have many different price tiers from entry level on through to premium, and we're definitely seeing strong demand, both at the low end and the high end of those ranges.

That's helpful. And then just a quick question on the GEOS. I know the commentary on the call about the FX with EMEA and APAC. But in the Americas business, is there anything to call out in the GEOS, anything you're seeing there in customer trends?

No, I don't think there's anything particular at this point to call out. There are a lot of dynamics in the geographies right now, the geopolitical spectrum. And so time will tell, but initial indications are that some of the initial kind of bumps that occur whenever there's a big change like that have evened out and people are starting to get back to kind of normal patterns. So right now, I would say we're encouraged by what we see. But again, it's a very dynamic environment.

Your next question comes from the line of David MacGregor with Longbow Research.

I wanted to ask about the new product introduction because it seems as though there was maybe a stronger-than-normal new product quarter. I wonder if that's true. And if so, can you just talk about the impact on growth and margins from -- just strictly from new product launches?

I think we typically release somewhere around 100 new products a year, and we would expect that 2026 is in line with that, if not slightly stronger as we look at some new things. In terms of margin profiles, new products are the ones that come out and they're fresh design. So they have all the latest components and design optimizations that we do. And they also -- if they have new features and capabilities and segmentation in the market, we can typically bring them out at appropriate prices for their particular competitive landscape. So they can be a margin enhancer. But in general, we rely on new products to really drive revenue growth within the company.

Right. And just to clarify on that, do we see maybe a slightly larger proportion of the reported revenues being generated from new products versus what we might have otherwise seen in prior years?

No, I would say it's historically consistent with what we've seen. Again, we're very consistent with product introductions, which means that generally, our revenue mix from new products tends to be pretty similar from year-to-year.

Okay. Good. And just as a follow-up, I wonder, you talked about the auto OEM business and the transition between the BMW and the Mercedes programs. Can you just help us think through kind of the -- how you're thinking about the cadence of revenues in 2026 leading into the ramp of that Mercedes early 2027?

As we mentioned in the remarks, we expect that 2026 would be a slightly down year compared to previous year because of the ramp down of the BMW program, which is starting to -- its tail off cycle into phase out. And then 2027 should be a ramp-up year for the Mercedes program.

You were flat in this quarter. Do you expect to be flat in 2Q and then see that revenue gap become more visible? Or do we see that begin in 2Q?

Yes. I would say probably not able to share the specific dynamic of Q2 just yet. But again, for the whole year, we definitely expect the long-term forecast that we're receiving would result in a slightly down year for auto OEM in 2026.

Your next question comes from the line of Ben Bollin with Cleveland Research.

I wanted to start, could we discuss a little bit in aviation. Could you discuss what you're seeing with respect to demand around new deliveries versus the retrofit opportunities? And any thoughts on order volume with bonus depreciation and what that's doing to backlog? And then I have a follow-up.

I think the new deliveries are definitely a strong contributor to the growth, stronger than the aftermarket side, although both contributed to the growth. Aviation aircraft makers are sitting on high backlog still. And so consequently, their volumes and cadence tend to be -- tend to move slowly as they work through backlog, but their objective is not to clear out backlog. Their objective is to keep feeding backlog and to incrementally grow as well. So in general, we see it as a very healthy cadence in the OEM side of things and have not, at this point, heard of any indications that people are hesitating around the purchase of new aircraft.

Okay. The other -- Cliff, you talked a little bit about thoughts on the commodity environment and how that looks this year and even into next. I guess bigger picture, how are you thinking about the overall balance sheet and working capital strategy with that backdrop? Has it changed? Any thoughts around working capital commits, more strategic procurement? Anything along those lines that you guys are thinking about that you can share?

Yes. As it relates to our balance sheet and inventory, we look at inventory really as a business tool for us. Depending upon the situation, we'll look at that to increase our safety stock for key components as such. And also, obviously, demand of our product, we have to take that into consideration. But it's really a key part of our overall operations is to make sure that we use that inventory appropriately to make sure we have products for when the customer needs it as well as to manage our full supply chain, including the commodities are out there.

Your next question comes from the line of Erik Woodring with Morgan Stanley.

Cliff, can we just get a very kind of high-level view from you on the state of the consumer, specifically the consumer that you guys kind of sell into? Just anything that is changing? I know you mentioned the Middle East conflict hasn't had any impact, but there's just a lot of kind of cross currents in the economy today. So I would just love your updated view on the state of the consumer. And maybe if you could tie into that. Just given your answer to that, maybe is there a specific segment or market where you maybe feel incrementally better about the year more than 90 days ago versus anywhere you feel maybe incrementally more cautious? Just if you could maybe tie those together and then a quick follow-up, please.

I would say that, Erik -- I would say that what we see of the consumer is pretty much the same as what we have seen over the past several quarters. There is a lot of public talk about how consumers are stressed. And certainly, we probably all have to believe that's true. At the same time, many of the banks and monitors of personal credit usage and spending seem to be very positive. People seem to be shaking off whatever their concerns are that they're voicing. For the customer base that we serve, we tend to serve those that place a high priority on their personal health and wellness as well as products for active lifestyles and mobility.

And so we believe we're serving a customer base in a market that's probably a little more resilient than what the average reporting out there is. In terms of segments where we feel better or worse, I would say we're optimistic about all of them. I would say that if there's any area of concern when it comes to oil prices and conflict is that it can tend to give some of those markets like marine and aviation, a little more hesitancy as people think about fuel prices and investments there. The one thing I would think is a positive even in that backdrop is that the stock market and the financial markets have been very strong, and so that tends to offset any hesitation. So in general, it's a mixed bag, but I would say the environment and the scenario is really very good considering everything that's going on.

Okay. That's super helpful. And then just as a quick follow-up. Cliff, you kind of alluded to leveraging your balance sheet in this commodity environment. Is the message that you're sending we will see costs going up in the second half and therefore, there will be some margin pressure, all else equal? Or given the illusion that costs or given that you're alluding to costs going up, how will you kind of protect margins with higher input costs? I just want to make sure I kind of understand the message as we go into the second half and in 2027.

Yes. As we mentioned, our -- we do have a lot of safety stock around some components that we've accumulated. And so the impact on our financials due to higher input costs at this point, we feel are well controlled in 2026, and we've included those in our outlook for our guidance. We're not at all starting to think about 2027 or issuing guidance from that but definitely people should expect that the higher input costs that are rolling their way through our inventory would start to appear more in 2027. So that's what we're seeing.

I think for our business, definitely, the bill of materials is -- if you look at our margin structure, we have ways that we can offset some increases here and there with efficiencies in other areas. So we're going to work hard to protect those margins. It's not our goal to go backwards. But again, we are facing some headwinds because of the component environment.

Your next question comes from the line of Ivan Feinseth with Tigress Financial Partners.

Congratulations on another great quarter and a great start to the year. And for the number of new watches that you're making that incorporate, inReach and LTE functionality, what percentage of buyers are signing up for a subscription plan?

Yes. We don't break it out, but the obvious point of those devices with the connectivity hardware is to use the services. And one of our key differentiators as a company is especially the inReach service around messaging and SOS services. And so we feel like we have a strong differentiator there that gives a real why Garmin for those product lines. And so I would expect to see more of those kinds of products coming to market in the future.

And then that including your family of apps, can you give like a big picture of how you see that growing your user base as they use like Messenger and Explore and those are integrated in more and more products?

We see people engaging with our apps across the broad spectrum. As you point out, there are several different app properties that we have that people rely on, such as Garmin Connect, of course, is kind of a baseline, but we also have the Golf app. We have Messenger. We have all kinds of apps across our business that interact with our devices. So we see strong engagement from our customers and good feedback from them.

And then especially Messenger, as somebody gets a Garmin watch, they tend to connect with maybe friends that weren't using it, but you see the overall growth of Messenger being used that could be a big driver to more product adoption?

We see Messenger pulling in not only the Garmin device user that manages the device, but also their friends, which allows them to communicate and of course, gives us opportunity to expose more people to the Garmin brand.

And then my second question is, how much more robust is the functionality that you provide on board to Mercedes compared to what you're providing to BMW?

Well, I think you're probably thinking maybe of content or ASP, but I would definitely say that it's a more complex unit and higher ASPs than what we saw with BMW because of its level of integration and also strong volumes. So we expect to see, again, Mercedes to be a strong contributor to scale starting in 2027.

Your next call comes from the line of Jordan Lyonnais with Bank of America.

[ANA Aviation], could you give a sense of what the size is of the defense and government markets and if that contributed to the gains in the quarter?

Well, we tend to send -- sell our products on a commercial off-the-shelf basis to opportunities within government and military. There are some light customizations that we do. But in general, we're selling the same platforms that we sell across commercial as well. It's a smaller part of our overall business, but one that we view as a key opportunity.

Your next question comes from the line of Noah Zatzkin with KeyBanc Capital Markets.

Hoping to get your thoughts on some of the more recent changes in tariff policy and whether or not that's changed your view on the overall tariff impact this year versus last quarter? I think relatedly, maybe how are you thinking about the potential magnitude of refunds that you might be positioned to recoup over time?

Yes. Regarding tariffs, yes, first of all, regarding the gross margin, year-over-year, there was an unfavorable impact on tariffs this Q1 versus last year since the tariffs were not in effect for that period of time. As we think about the remainder of the year, we do expect there to be some tariff impact for the remainder of the year, basically at the current trends we're seeing. Obviously, that's evolving, but that's our current opinion. As it relates to the refunds, we have not recorded any receivable or benefit for those refunds at this point in time. We'll continue to evaluate that and record at the appropriate time and provide more details when we do record that receivable and benefit.

Great. And then maybe just one on Marine, another strong quarter there. What are you guys seeing in terms of the underlying trends in the marine end market? And maybe just any color around what you -- what you think is helping to drive what I assume to be share gains there? That would be great.

I think for Marine, for us, we saw particular strength on deliveries to builders. So they definitely helped contribute to the growth that we have in the quarter, although the retail and the aftermarket was also a contributor. I think in general, we're starting to hear some of those customers start to express some worry given the current geopolitical situation. But I think a lot of times, that worry takes some time to filter through the market. So we're taking a wait-and-see approach on that. But in general, I would say that the overall market has been very strong, and we've had a very, very positive reaction to our new products, particularly the Spy pole and the 360 sonar.

Your next question comes from the line of David MacGregor with Longbow Research.

Just a couple of cleanups. I guess on operating expenses, dollar expenses are up, but you're leveraging those increases very well. How should we think about the pace of incremental operating expense investment in '26 and '27 and also your ability to continue leveraging those investments at the operating line?

Yes. Regarding the operating expenses on a consolidated basis, for the full year, a percentage of sales, we expect operating expenses to be relatively consistent year-over-year. So a few things impacting our operating expenses. Obviously, the biggest driver there is personnel-related expenses, really the headcount, compensation as such, primarily in the R&D side of things just to fuel our innovation. But a couple of things also in the quarter, one of which was foreign currency that impacted our top line, they increased that, but also did increase some of our expenses there, too. Then also, we did have an acquisition of MYLAPS that anniversary this year also from that standpoint and they're annualized. So those are some factors in there. But we expect relatively consistent kind of pace in our operating expenses.

Flat year-over-year, I guess, is the guide.

Yes, consistent growth.

Right. And then secondly, just on distribution, are you seeing any meaningful change this quarter in the route to market? Any growth in distribution network to call out and how that may have influenced the reported margins?

I would say nothing specific to call out. We have very broad-based distribution across all kinds of retailers and distributors. And so I think the diversity of our go-to-market channels is probably richer for Garmin than any other company out there because of the broad base of markets we serve as well as the broad product categories that we have within each market.

There are no further questions at this time. I will now turn the call back to Teri Seck for closing remarks. Teri, please go ahead.

Thank you all for joining us today. Doug and I are available for callbacks, and we hope you all have a great day. Bye.

This concludes today's call. Thank you for attending. You may now disconnect.

[Audio Gap]

Hello, everyone. Thank you for joining us, and welcome to the Garmin Limited Fourth Quarter and Full Year 2025 Earnings Conference Call. I will now hand the call over to Teri Seck, Director of Investor Relations. Please go ahead.

Good morning. We would like to welcome you to Garmin Ltd.'s Fourth Quarter and Full Year 2025 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 related transcript will also be available on our website. This morning's earnings call includes projections and other forward-looking statements regarding Garmin Limited and its business. 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.

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 filed with the Securities and Exchange Commission. Presenting on behalf of Garmin Ltd. 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 Clifton Pemble.

Thank you, Teri, and good morning, everyone. As announced earlier today, Garmin achieved another quarter of outstanding financial results, driven by strong broad-based demand for our products. Consolidated revenue increased 17% to more than $2.1 billion, which is a new fourth quarter record and our first quarter to exceed $2 billion. We experienced strong double-digit revenue growth in 3 business segments, reflecting the strength of our highly diversified business model. Gross margin was comparable to the prior year at 59.2% while operating margin expanded 60 basis points to 28.9%. This resulted in record fourth quarter operating income of $614 million, up 19% year-over-year and record pro forma EPS of $2.79, up 16%.

2025 was another year of remarkable growth and achievement for Garmin with record consolidated revenue, record operating income and record revenue for all business segments. We attribute this strong performance to our strategic focus on market diversification and creating superior products that are essential to our customers' lives. This approach has been a winning strategy for us since we were founded more than 36 years

ago. Consolidated revenue increased 15% to $7.25 billion, which is a new annual record and up nearly $1 billion over 2024. Gross margin of 58.7% was comparable to 2024, which is a significant achievement considering the impact of generationally high tariff structures that took effect early in the year. Operating margin expanded by 60 basis points to 25.9%, resulting in record full year operating income of nearly $1.9 billion, up 18% year-over-year. Before sharing our full year outlook, I want to provide insights on what is important to us when considering forward-looking guidance. Our primary objective is to deliver the best result for Garmin on a consolidated basis. There are many factors that influence individual segment results. And we have said before that the diverse nature of Garmin's business gives us multiple paths to achieving consolidated goals. This makes individual segment growth targets less relevant, especially when viewed in isolation. With this in mind, we will continue to provide consolidated guidance measures and we will provide qualitative forward-looking insights for segments when it is helpful to do so, but we will no longer emphasize individual segment growth targets. This approach aligns with our primary objective to deliver the best results for Garmin on a consolidated basis.

With this in mind, we anticipate 2026 to be another year of strong top and bottom line growth. We expect revenue to increase approximately 9% to $7.9 billion, and we expect operating income to exceed $2 billion for the first time.

Many are wondering how industry-wide memory constraints will affect us. Our guidance considers everything we know about the supply chain environment, including recent cost pressures on memory components. It's our practice to continually seek efficiency throughout our entire supply chain by leveraging our vertically integrated business model and scale to optimize our cost structure. We've always used inventory as a business tool, and we have intentionally increased inventory levels of certain components and products to ensure we can meet long-term demand. We also have strong relationships with our suppliers and are working closely with them to meet the expected demand for our products.

While no one wishes to see supply chain challenges, we believe we are well prepared. Our strong results and positive outlook give us confidence to propose an annual dividend of $4.20 a share, reflecting a 17% increase over the current dividend amount, which will be considered by shareholders at the upcoming annual meeting. In addition, our Board of Directors recently approved a $500 million share repurchase program, effective through December 2028. Doug will discuss our financial results and outlook in greater detail in a few minutes, but first, I'll provide a few remarks on the performance of each business segment.

Starting with Fitness. 2025 was another exciting year of growth as customers embrace the healthy active lifestyles our brand represents. For the year, Fitness revenue increased 33% to $2.36 billion, surpassing $2 billion for the first time and was driven by wearables as we continue to benefit from both market share gains and market growth.

Gross margin was 60%, a 130 basis point improvement over the prior year. Operating income increased 50% year-over-year to $726 million, and operating margin expanded 360 basis points to 31%, reflecting both improved gross margin, and operating leverage. During the quarter, we announced our collaboration with health care payments provider, TrueMed to assist customers using pretax health savings account and flexible savings account funds for qualifying purchases of select Garmin products. We recently published our annual Garmin Connect data report which shows that on average, our users increased activity levels by 8% during the year, reflecting a high level of engagement with our products and app platforms. At the 2026 consumer electronics shows, the [indiscernible] 4 and the [indiscernible] 4970 received innovation awards for novel features in digital health and fitness, and we announced exciting enhancements to our premium [indiscernible] Connect Plus service with nutrition tracking and insights powered by AI-based active intelligence to help users achieve nutrition goals.

Looking forward, we expect another year of strong performance for fitness driven by demand for our current product lineup and contributions from new product introductions. We also expect that the Fitness segment will be our strongest contributor to 2026 consolidated growth.

Moving to Outdoor full year 2025 revenue increased 5% to $2.05 billion, also exceeding $2 billion for the first time. Growth in outdoor was primarily driven by adventure watches with a full year of contributions from the highly successful fenix 8 series that was launched in 2024 followed by the launch of the Phoenix 8 Pro with inReach technology in September of 2025. Gross and operating margins were 66% and 34%, respectively, resulting in operating income of $690 million. During the quarter, we launched the inReach Mini 3+ satellite communicator with voice, text and photo sharing. This compact and rugged communicator offers essential SOS safety features and reliable communication that explorers can use to stay connected with loved ones while venturing beyond cell phone coverage. And with up to 2 weeks of battery life in the 10-minute tracking mode, the inReach Mini 3 Plus can be used on multi-day trips without added worry of battery charging. Several outdoor products also received CES Innovation Awards, including the Phoenix Pro microLED version, [indiscernible] BlazeEquine Wellness System and the Descent S1 Buoy which highlights our commitment to exploring new product categories and developing groundbreaking innovation.

Looking forward, we expect full year growth in Outdoor to accelerate in 2026 compared to 2025 driven by a significant number of new product introductions. We also expect stronger performance in the back half of the year due to the timing of product launches.

Looking next at Aviation, full year 2025 revenue increased 13% to $987 million with growth contributions from both OEM and aftermarket product categories. Gross and operating margins expanded year-over-year to 75% and 26%, respectively, Operating income increased 22% to $257 million. During the quarter, we launched the D2 Air X15 and the D2 [indiscernible], our latest aviator smartwatches with cockpit connectivity and advanced aviation, health, fitness and smartwatch features. We announced that the Garmin G5000H cockpit system was selected for the Brazilian Air Force UH-60 Black Hawk helicopter, part of a growing list of military modernization programs based on our advanced commercially available integrated cockpit systems.

On December 20, 2025, our Autoland system was used by a customer for the first time, returning the aircraft and crew safely to the ground following rapid depressurization while operating in instrument flight conditions over the Rocky Mountains. This incident illustrates how our cockpit systems can improve the safety margins of flight. We are very proud of our aviation team for creating our award-winning Auto LAN technology. Looking forward, we expect aviation revenue will continue to grow in 2026, in line with historical norms.

Turning to the Marine segment. Full year 2025 revenue increased 10% to $1.18 billion, driven by growth across multiple categories led by chartplotters. Gross and operating margins were 55% and 21%, respectively, resulting in operating income of $251 million. We recently introduced the flagship GPS Map9000XSV lineup to further strengthen our offerings in the Chart Platter category. The GPS map 9000 XSB offers stunning 4K resolution displays, 5 gigahertz WiFi networking and industry-leading sonar performance. Also during the quarter, we launched Garmin OnBoard, a versatile man overboard and engine cutoff system that uses wireless technology, offering users freedom to move around the boat while still enjoying the protection of this important safety system. Garmin OnBoard was selected as the winner of the 2025 Dame Design Award in the Safety and Security Award category at the recent [indiscernible] Marine exhibition in Amsterdam.

During 2025, we received multiple awards, including being named Most Innovative Marine Company by Soundings Trade Only for the third consecutive year, NMEA Manufacturer of the Year for the 11th consecutive year and we received the National Boating Safety Award for the fifth consecutive year. This is an unprecedented level of industry recognition, and we attribute our success to the outstanding products we offer and our strong commitment to serving customers.

In 2026, we expect Marine segment growth to be consistent with the prior year based on improving market conditions. Moving finally to the auto OEM segment. Full year 2025 revenue increased 9% to $665 million, primarily driven by growth in domain controllers. Gross margin was 17%, and the operating loss was $49 million for the year. At the recent Consumer Electronics Show, we introduced our next-gen unified cabin domain controller that adds digital key capability, seat specific audio and video and an AI system designed to make vehicle interactions more conversational and powerful. We also announced our collaboration with Meta to explore new ways of interacting with the vehicle.

We continue to achieve important milestones leading up to the launch of our next domain controller program. I'm pleased to report that this program is with renowned global automaker, Mercedes-Benz and will broadly apply across their portfolio of passenger car models with significant volumes ramping up in 2027. In 2026, we expect revenue to decrease year-over-year as we have reached the peak of BMW domain controller volumes and a certain legacy programs approach end of life. We expect operating losses to narrow in 2026 as we shift certain auto OEM R&D resources to accelerate product road map development in other segments. That concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug?

Thanks, Cliff. Good morning, everyone. I'd like to begin by reviewing our fourth quarter and full year financial results, provide comments on the balance sheet, cash flow statement, taxes, our 2026 guidance. We post a revenue of $2.125 billion for the fourth quarter, representing a 17% increase year-over-year. Gross margin was 59.2% comparable to the prior year. Operating expense percentage sales was 30.3%, a 60 basis point decrease. Operating income was $614 million, 19% year-over-year increase. Operating margin was 28.9%, a 60 basis point increase from the prior year. Our GAAP EPS was $2.73, and pro forma EPS fell $0.79, a 16% increase from the prior year pro forma EPS.

Looking at our full year results. We posted revenue of $7.246 billion, representing a 15% increase year-over-year. Gross margin was 58.7% comparable to the prior year. Operating expense as a percentage of sales was 32.9%, a 50 basis point decrease. Operating income was $1.876 billion, 18% increase. Operating margin was 25.9%, a 60 basis point increase from the prior year. Our GAAP EPS was [ $8.59 ], pro forma EPS was $8.56, 16% increase on prior year pro forma EPS.

Next, look at our fourth quarter revenue by segment and geography. During the fourth quarter, we achieved record revenue on a consolidated basis. We achieved double-digit growth in 3 of our 5 segments led by the fitness segment with 42% growth. Followed by marine segment with 18% growth, aviation segment with 16% growth. By geography, the Americas region achieved strong double-digit growth of 21%, resulting in quarterly revenue exceeding $1 billion for the first time. EMA region, APAC region had 14% and 8% growth, respectively.

For full year 2025, we achieved record revenue on a consolidated basis and record revenue for each of our 5 segments. Our geography, we achieved 18% growth in EMEA, 40% growth in Americas and 12% growth in APAC. Looking next, operating expenses. Fourth quarter operating expenses increased by approximately $80 million or 14%. Research and development increased by $36 million, primarily due to personnel-related expenses. SG&A increased by $44 million, primarily due to increased advertising and personnel-related expenses.

A few highlights on the balance sheet, cash flow statement, dividends and share repurchase. [indiscernible] We ended the quarter with cash and marketable securities of approximately $4.1 billion. Accounts receivable increased sequentially and year-over-year to approximately $1.3 billion due to strong sales in the fourth quarter. Inventory balance increased year-over-year to approximately $1.8 billion. For our fourth quarter of 2025, we generated free cash flow of $430 million, a $30 million increase from the prior year quarter. For the full year 2025, we generated free cash flow of approximately $1.4 billion, a [ $24 million ] increase from the prior year. Our full year 2025 capital expenditures were $270 million, an increase of $77 million over the prior year. For 2026, we expect free cash flow to be approximately $1.4 billion, approximately $400 million of capital expenditures. The expected year-over-year increase in capital expenditures primarily due to a new manufacturing facility in Thailand, we expect to be operational in early 2027.

During 2025, we paid dividends of approximately $664 million. Also, we announced our plan to seek shareholder approval for a $0.60 increase in our annual dividend beginning with the June 2026 payment. This is a 17% increase from our current annual dividend $3.60. [indiscernible] a cash dividend of $4.20, $1.05 per share per quarter. 2025, we purchased $181 million of company shares. Also, our Board of Directors recently approved a $500 million share purchase program through December 2028 to replace the remainder of the previous $300 million authorization. Our full year 2025 pro forma effective tax rate was 17.4% compared to 16.7% in the prior year. Increase in the current year effective tax rate is primarily due to the 2025 U.S. tax legislation, which changed capitalization requirements of certain R&D costs, resulting in a decrease in certain U.S. tax deductions and credits.

Turning next to our full year 2026 guidance. We estimate revenue approximately $7.9 billion increased approximately 9% for 2025. We expect gross margin to be approximately 58.5%, a 20 basis point lower than our 2025 gross margin due to higher product costs, partially offset by favorable segment mix. We expect an operating margin of approximately 25.5%. 2026 pro forma effective tax rate is expected to be 16%, [ a 140 ] basis point decrease compared to 2025.

Expected year-over-year decrease in 2026 pro forma effective tax rate, primarily due to an increase in certain U.S. tax deductions [indiscernible] of certain provisions in 2025 U.S. tax legislation, which came effective 2026. This results in expected pro forma earnings per share approximately $9.35, a 9% increase over 2025 pro forma earnings per share. This concludes our formal remarks. Jade, can you please open the line for Q&A.

[Operator Instructions]

Your first question comes from the line of Joseph Cardoso from JPM.

And maybe if I could, for the first one, just wanted to touch on the memory side of things. like Cliff, I appreciate the comments that you made, but I was curious if you could help contextualize more, like how material of an impact you're expecting memory to be on your 2026 guide. And which areas of the portfolio are more or less impacted there? And then as we think about mitigation factors, you obviously mentioned the inventory. However, how are you thinking about other levers like de-specking or pricing to offset any headwinds here? And then I have a follow-up.

Joe, I think in terms of quantifying the impact, we don't quantify individual components of our cost structure. So we won't be sharing that. Definitely, there's pressure on memory costs. There are certainly a lot of items in our overall BOM that pricier items like displays and that kind of thing. So we simply just manage the entire BOM to be as cost efficient as possible. There's other opportunities to make the bombs more efficient and also make our overall supply chain more efficient, looking for cost opportunities across the spectrum. So we're working all different angles, and there isn't 1 area to identify that we would isolate because it's the entire picture. I would remind everyone that our overall margin structure is higher, and that's because we're a vertically integrated company. And so therefore, when we see some variation at the BAM level, of course, the impact to the overall margin is less impactful.

Got it. I appreciate the color there. And then maybe just as my follow-up, obviously, another strong quarter, actually a year for wearables and in fitness. You highlighted share gains and obviously, the market growth around product refreshes as key drivers. I'm assuming pricing has also been a tailwind this year for Garmin. Correct me if I'm wrong there. But could you maybe just talk about how each of these factors have contributed at least at a high level to the wearables growth this year? And as we think about growth for 2026 that you highlighted as being a larger contributor, at least as it relates to the fitness segment as a whole. How are you thinking about each of these factors and any kind of shift in terms of contribution there.

[indiscernible] Yes, our 2025 results in Fitness and Outdoor was influenced heavily by wearables. And definitely, volume was the driver. There's some minor impact from ASP, but most of it was really volume driven. And as we look forward to 2026, we feel like the momentum in the market for our brand and for our products is is still there. That's why we're basically on the qualitative side of things, saying that we expect the growth to continue, and we also expect that Fitness will be the larger contributor because of the broader product line across running and advanced wellness.

And Cliff, maybe just anything between how much is new customers versus existing customers refreshing from '25 looking at '26?

Yes. I think we're still seeing -- most of our new customers are new to Garmin. So that's a very encouraging thing, and we see strong pull-through rates on registrations, showing that as products go into the channel, they're selling out and customers are activating those. So we feel very positive about the customer trends and very positive about the retail landscape.

Your next question comes from the line of Erik Woodring from Morgan Stanley.

Cliff, maybe just touching on auto OEM. Back in early 2023, you first introduced the idea that this business could grow 40% annually. I think the target was scaling to $800 million of annual revenue. You didn't quite get there, but I would just love to like better understand from you what you learned about this business over the last 3 years, that gives you the conviction to kind of double down as we go forward? And just to carry on that is just what details can you share with us about the next evolution of this business with Mercedes as we think about through your growth rates or customer diversification targets or target margins. We just love to understand kind of what you learned and how that influences the next 3 years of this business, please? And then a follow-up.

Okay. Yes. So our view in 2023 was based on what we knew at the time, which was based on projections given to us by our automotive OEM partners and of course, like everything, they go through cycles and some of their assumptions are not always correct. And in that case, I think the outlook was more positive then than what it turned out to be because of changes in the overall -- their market structure and their geographic results, whether it's between Asia, Americas or Europe. So that's the situation we found ourselves in. In terms of what we learned, I think we have been managing this business in really 2 goals. One is to achieve scale, and we're working and making good progress towards that. The other is to invest for the future so that we can demonstrate to automakers that we have the innovation capability and the operational capability to meet their needs. And I think we've definitely achieved that as well. And so as we look forward, one of the adjustments we're making is to shift some of those R&D resources that we've been using to develop new business and concepts and develop our other product lines. And we feel like we've reached a point of critical mass where automakers realize that we can do this job for them, and it would then allow us to work on the scale part of the equation.

And then maybe just following up, I was kind of taking it back by your outdoor comments on 2026 or was at least eye catching, you're alluding to accelerating growth in new product features. I guess I was just going through the IDC data quickly. And fenix is the large majority of wearables revenue in the Outdoor segment. And if history is a guide, the next fenix wouldn't launch until January 2027. So I guess, just I'm wondering inherently in your messaging about outdoor, if you're maybe messaging different timing for fenix launch or if maybe you're expecting to launch all new models in this segment? Just trying to kind of get a better understanding of exactly how to think about new product launches and the potential for acceleration in outdoor this year?

Well, we don't comment on specific product launch timing. The only thing that we would like people to know is that we do have a very active year plan for for outdoor. And I would expect that many of our launches would occur in the back half of the year, which is why I commented that we expect the revenue to be stronger in the back half. So that's our plan, and we'll continue to update people as we go along throughout the year.

Your next question comes from the line of Tim Long from Barclays.

You have Alissa on from Tim Long team. Just a quick question on Aviation. With the Blackhawk win, should we kind of assume higher military exposure in the aviation segment? Is this an area of expansion for you? Just kind of trying to think about if there's different go-to-market strategy there? And then I have a follow-up.

Is, in terms of a project like the Black Hawk helicopter they're using commercial off-the-shelf components from our cockpit system lineup to retrofit those aircraft and fully modernize them. And this is an example of a great program. There's lots of these kinds of programs around where they don't necessarily have to be the same kind of hardened military requirements for or what people might think of for fighter jets and that kind of thing. But we still can provide modern cockpit systems to these workhorse aircraft that the military depends on.

So it definitely is a growth opportunity, but they're incremental in our view. So they add to the total, and they're good wins, and we continue to pursue more.

That's helpful. And then just a follow-up, how is -- any update on how Connect Plus uptake is tracking?

So Connect Plus is definitely an exciting adder to our business. We added the nutrition features, I mentioned earlier. The nutrition feature really accelerated the number of free trials that we have. And so that was really good to see. And also, the conversion rate of those trials is very, very high. So we think that's a winner feature and we'll continue to expand and enhance Connect Plus in order to add more value to customers there.

Your next question comes from the line of Ben Bollin from Cleveland Research Company.

Cliff, could you talk a little bit more about Mercedes in this ramp opportunity? Is this for 2027 model years, so it commences in late '26. Is this commencing in later '27 for 2028 model year? Just any thoughts on when we can start to expect some contribution from that effort?

I think there'll be some limited contributions in late 2026. It's really, I would say, inconsequential, but the ramp is really early 2027 and it's a very aggressive program and ramp with significant volumes that will be achieved over the life of the program.

The other one I wanted to touch on is you commented a little bit about channel inventory overall. Have you seen any change in behavior of your retail partners as they've recognized that hardware costs are going up broadly in other consumer electronics. Do you think that's influencing their commitments or their visibility they're providing you? Any thoughts on pull forward that you might be seeing? That's it for me.

Yes. I think retailers really are enthused about carrying our brand. We saw a much higher level of engagement from certain retailers over the holiday season as they were happy to offer something from Garmin that was different from everything else that they typically offer. And I think their enthusiasm is really triggered by their customers. They see customers coming into the store, the customers are buying. So I feel like, overall, the retail picture, especially some of the brick-and-mortars has been very pretty positive.

Your next question comes from the line of David MacGregor from Longbow Research.

I wanted to just start on fitness and ask you about the TrueMid collaboration and how meaningful the 2026 revenue growth allowing HSA FSA funds to be used in the purchase of select Garmin products could turn out to be.

TrueMed is a way by which people can purchase the product on our website using using their HSA funds. And it really is a great program, and each product that's in the program has to be evaluated and approved, but it allows people another payment approach basically on our website. So the customers come directly to our website. They purchased the product that's available to be purchased with this program. And it has quickly become one of our significant outlets, if you will, if you consider it a stand-alone outlet for our products.

Okay. Let me just follow up by, again, within Fitness. Just thinking about within the wearables category, sort of nontraditional form factors, how are you thinking about the opportunity for Garmin there and from a timing standpoint? How likely we are to see developing something and introducing something there.

We don't share our future product plans in what direction we might go with those. I would point everyone to our history, which is that we explore new product categories and new form factors and deliver really great products to our customers. So that's what we'll continue to do to drive and grow the segment.

Okay. If I could just squeeze in a third one quickly. Are you able to quantify the benefit to Garmin, if the Supreme Court overturns the [indiscernible] tariffs?

Yes. We probably won't share specific dollar amounts, but as you can appreciate, the 20% tariff and now moving to 15% is a significant cost adder to our products. So as we mentioned in our remarks, we've done an excellent job. Our teams across the world have done phenomenal in mitigating that. And I think we've come out on the other side of that in a very, very good position and if it goes away, then certainly that changes the game in terms of our cost structure and things, but there's offsetting factors, too, with the supply chain constraints and memory issues that are going on right now. So there will be puts and takes, but we're not really counting on one approach or the other. We're assuming that everything stays pretty much as it is with regard to tariffs.

Your next question comes from the line of Ivan Feinseth from Tigress Financial Partners.

Congratulations on another great quarter and phenomenal year. while some of my questions have been answered as far as tariffs and memory concerns, it's incredible that your supply chain and your integrated manufacturing capabilities have helped to mitigate that. With the launch of your new products that have connectivity like the fenix Pro and the expanded capabilities in the new [indiscernible]. What kind of uptake are you seeing on the subscription services? And what percentage, for example, of people buying the fenix Pro are opt-in for the LTE and satellite connectivity.

Yes. I think fenix 8 Pro is a product that's built around connectivity. So when somebody buys that product, they're definitely interested and motivated to activate the inReach service. We've already seen SOS events with the fenix 8 Pro, where people bought the product, are wearing them on adventures and they needed help or needed some other kind of service while they were out there, and they were able to achieve that right on the wrist. So we think it's a breakthrough platform. It's certainly not for everyone. But on the other hand, it's an important adder to our product line, and we'll continue to expand on that to add that capability to more products.

And my follow-up question is, what kind of halo effect are you seeing on products from your acquisition last year of MYLAPS, including there was some optimism that would help with, for example, the Garmin Catalyst, and I see just launched an upgrade to the Catalyst was that -- did that have an effect and then you just launched some competitive track capabilities on the new Zumo XT 3.

Yes. So MYLAPS allows us the opportunity to improve the overall race experience for customers from the sign-up process on through to race day, in race results and the devices that they wear during the race. So we feel like this is going to give us a high level of fidelity with customers as they embrace and pursue these these race activities. And in terms of the other markets, one of the benefits of MYLAPS is that it's across many different markets, so running is one, but they also do, as you say, the racing and also moving into equine as well. So we just feel like that opens up new avenues for us to apply our innovation and our unique products into new areas.

Your next question comes from the line of Noah Zatzkin from KeyBanc Capital Markets.

I guess maybe zooming out, if you could just kind of share any thoughts maybe around the global wearables market, how that's kind of been trending? Has it been kind of stagnant or a tailwind to your trends? And any changes that you've seen over the last year or so, either competitively or just in overall growth rates?

So from our perspective, what we believe is happening is that the overall market has been on a growth path. I would call it in the steady growth in the mid-single to up to 10% kind of range. Everyone will get confirmation on that as data comes out for the full year. But that's our belief of what's happening in the market. So that's 1 driver of our overall growth, but market share has been a really important one for us as well as we've been able to take share both above and below us, from different players. And so I think people recognize the value of our products and the uniqueness of the features that they offer, and we're seeing the results of that with our market share.

Great. Really helpful. And then maybe just one more on marine, impressive growth there in '25, given kind of the choppiness in the end market. So I think you mentioned maybe kind of consistent growth expected in '26. What's kind of underlying that from a kind of industry perspective? And in general, like any thoughts around the marine industry looking out this year would be great.

Well, what we see in Marine is that the market has been, I'd say, finding its footing and is incrementally positive as we move into 2026. So the underlying market seems, I would say, healthy. The boat shows seem very active. And it's a similar story where especially those larger boats with more equipment, they tend to be very popular and a lot of our equipment goes on those boats. And of course, in the fishing story with our products and the industry-leading sonar capability and chartplotters and mapping all of those things are driving market share for us as well.

Your next question comes from the line of Ron Epstein from Bank of America.

So yes, maybe just changing gears a little bit in the patient direction. Can you talk a little bit to the recent acquisition facility you guys bought in Meta and what your goal is for that and what that can bring to the table for Garmin?

Yes. So we were really excited to find that facility. We have lots of projects and lots of equipment that have to go into all kinds of aircraft. As you know, the process of taking our products to market is not as simple as just creating the product. They all have to be certified on each type of aircraft. And this facility allows us not only very, very significant hanger space to bring in very large aircraft, but it also allows us to build a completely new staff of people that can do certification work and aircraft modifications. So we believe over the long term that will help us reach new opportunities and more aircraft with more equipment.

And if I can read between the lines a little bit, is the facility like this give you the capability to maybe offer things on larger airplanes?

Well, it's a very large hanger. Yes, I'm excited about that.

All right. And if I may, just a quick follow-on here. Following up on -- I think it was Alyssa's question earlier about some of the defense stuff you guys are doing? With the changes in the defense acquisition system, the Department of War, Department of Defense, whatever you want to call it, has been trying to do more stuff on commercial terms with commercial contractors broadly. And you guys are almost exclusively commercial. Is that opening a door for you to do other things that maybe weren't -- I don't know, in the plan just a year ago before they really started to push more commercial because one would think potentially, given everything that's going on, maybe that is more opportunity for you all.

We believe that will bring more opportunities even though some of these discussions and the shift has has started to gain some momentum. The actual selection and identification of programs and all of that still takes time. So we view it as a long-term opportunity, but a nice shift as people look at the equipment that's available and realized that military especially could benefit from the commercial products that we offer.

Your next question comes from the line of Erik Woodring from Morgan Stanley.

Just one quick follow-up, Cliff. I would just love to know how you're thinking about kind of the ratable side of your business. Over the last 3 years, that revenue capture over time has marginally decreased to around 5%, that's really seems to be mostly part of your success in the transactional business. So I'm just wondering how much of a priority is growing this ratable kind of part of your business? And is there any way I know it kind of constitute subscriptions and services. But is there a way to help us think about margins on the ratable business versus the point-in-time business?

Yes. I think like every kind of subscription-based business, the margins tend to be higher service-based businesses are definitely higher that way. Our objective is to grow those within Garmin, but we also are not focusing on that as the only growth path. And so we're growing everything around it. The nice part is that our subscription base business has been growing as strongly or even stronger than the overall business, but everything else is growing around it so much that it still hasn't triggered that [ 10 ]% threshold yet. So -- so we feel like we're in a good position. We have lots of ideas of things that we can offer people going forward. And we're going to continue to build that business across every one of our segments.

At this time, there are no further questions. I will now turn the call back to Teri Seck for closing remarks.

Thanks, everyone, for joining us today. As usual, Doug and I are available for callbacks. And we hope you have a great day. Bye.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Garmin Ltd. Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Teri Seck, Director of Investor Relations. You may begin.

Good morning. We would like to welcome you to Garmin Limited's Third Quarter 2025 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 related transcript will also be available on our website.

This earnings call includes projections and other forward-looking statements regarding Garmin Ltd. and its business. 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. 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 and Form 10-Q 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. As announced earlier today, Garmin achieved another quarter of outstanding financial results, reflecting the strength of our unique, highly diversified business model. Consolidated revenue increased 12% to nearly $1.8 billion, which is a new third quarter record, and we experienced strong double-digit revenue growth in three of our business segments. These results are even more remarkable, considering the strong comparison from last year when consolidated revenue increased over 24%.

Gross and operating margins were 59.1% and 25.8%, respectively, resulting in record third quarter operating income of $457 million, up 4% year-over-year and pro forma EPS of $1.99. We are pleased with our results so far in 2025, and we are on track to achieve full year revenue of $7.1 billion as communicated in July.

Given our strong year-to-date performance and outlook for the remainder of the year, we are raising our full year EPS guidance. We now anticipate pro forma EPS of $8.15 a share, reflecting in an increase of $0.15 over the prior guidance. In a moment, I will cover changes to the segment revenue model that is the foundation for our consolidated guidance. But it's important to remember that the segment model is simply a point-in-time guideline that evolves based on trends throughout the year.

With the majority of 2025 behind us, and the momentum we are experiencing entering the important Q4 holiday season, we anticipate delivering another record year of double-digit growth in revenue, operating income and EPS. Doug will discuss our financial results and outlook in greater detail in a few minutes, but first, I'll provide a few remarks on the performance and outlook for each business segment.

Starting with Fitness. Revenue increased 30% to $601 million, with growth led by strong demand for advanced wearables. Our performance can be attributed to the breadth and depth of our wearable product lines, which offer highly differentiated features across many different price points. Gross and operating margins were 60% and 32%, respectively, resulting in operating income of $194 million. During the quarter, we launched several new products, including the Edge 550 and 850 cycling computers that bring new coaching plans and cycling metrics to the Edge lineup, the Bounce 2 smartwatch for kids offering voice calling, messaging and geo-fencing alerts and the Venu 4 smartwatch with a premium all metal design, a built-in flashlight and many new health and wellness features.

We also announced our collaboration with King's College London to study the health of women and their partners during and after pregnancy with an emphasis on detecting and managing potentially dangerous conditions such as gestational diabetes and hypertension. Garmin is the exclusive partner of King's College London for this study, which is one of the largest of its kind to incorporate wearables into study protocols and results. Given the strong performance of the Fitness segment and the demand we are expecting during the holiday season, we are raising our revenue growth estimate to 29% for the year.

Moving to Outdoor. Revenue decreased 5% to $498 million, driven primarily by consumer auto and adventure watches following the 1 year anniversary of the dezl series launch as well as the highly successful fenix 8 launch. Gross and operating margins were 66% and 34%, respectively, resulting in operating income of $170 million. During the quarter, we launched the fenix 8 Pro, which adds satellite and cellular connections and offers a range of communications options, including voice, text, live tracking and SOS using the Garmin Response Center, making this smartwatch the ideal companion for adventures on and off the grid.

In addition, the fenix 8 Pro lineup now includes a version with a microLED display. MicroLED has been highly sought after for its superior brightness and the ability and the fenix 8 Pro is the first device of its kind to offer this exciting new display technology. I'm proud of our global team who worked very hard to bring microLED technology to the wearable market.

Also during the quarter, we entered a new market with the launch of our Blaze equine wellness system designed to help horse riders, owners and trainers monitor their horses' health and fitness levels. We are pleased with the performance of the Outdoor segment, but delivering back-to-back years of double-digit revenue growth has been more challenging than originally anticipated, following the 1-year anniversary of the highly successful product launches in this segment, most notably the fenix 8. The recent launch of the fenix 8 Pro partially offset pipeline fills from the previous year, but did not fully close the gap when compared to the fenix 8 launch.

As it has in the past, product release cycles can create short-term noise, but in the long-term view, the Outdoor segment has been a remarkable performer and has a remarkable track record of growth. Considering our year-to-date performance and outlook for the fourth quarter, we now expect Outdoor revenue to increase 3% for the year.

Looking next at Aviation, revenue increased 18% in the third quarter to $240 million, with growth contributions from both OEM and aftermarket product categories. Gross and operating margins were 75% and 25%, respectively, resulting in operating income of $61 million. During the quarter, we certified a retrofit integrated cockpit system for the Cessna Citation CJ1, which brings new capabilities and safety-enhancing technologies to this popular light jet. We also added Autoland and Autothrottle capability to the King Air 350, which is the largest and most complex aircraft to receive Autoland capability to date.

And we announced additional certifications for our GFC 600 autopilot bringing the performance and safety enhancing benefits of our flight control technology to more aircraft models. Given the strong third quarter performance of the Aviation segment and recent trends, we are raising our revenue growth estimate to 10% for the year.

Turning to the Marine segment. Revenue increased 20% to $267 million, with growth across multiple categories, including chartplotters, audio and cartography. Gross and operating margins expanded to 56% and 19%, respectively, resulting in operating income of $49 million. During the quarter, we expanded our trolling motor product lines with the Force Current, which is the industry's first hands-free Kayak propulsion system, and we expanded the Force Kraken lineup, which now includes a model with a 110-inch drive shaft for large fishing boats. We also launched the ECHOMAP Ultra 2 chartplotter offering a large 16-inch display, premium mapping and exceptional sonar capabilities.

We were recently recognized by the National Marine Electronics Association as Manufacturer of the Year for the 11th consecutive year, and we received 8 Product of Excellence awards ranging from chartplotters to marine smartwatches, reflecting the strength and diversity of our product lineup. Given the strong third quarter performance of the Marine segment and recent trends, we are raising our revenue growth estimate to 10% for the year.

And moving finally to the Auto OEM segment, revenue decreased 2% to $165 million as certain legacy programs approach end of life and were partially offset by growth in our most recent BMW domain controller program. Gross margin was 15% and was negatively impacted by an increase in accrued warranty costs associated with prior period sales, which contributed to the operating loss of $17 million. During the quarter, we shipped the 3 millionth BMW domain controller, demonstrating our capability as a respected Tier 1 supplier to the automotive market. We continue to achieve important milestones leading up to the launch of our next large auto OEM program, which is anticipated to add significant production volumes and expand the scale of our business. Given the year-to-date performance and recent trends, we now expect Auto OEM revenue to increase approximately 8% for the year.

That concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug?

Thanks, Cliff. Good morning, everyone. I'll begin by reviewing our third quarter financial results and provide comments on the balance sheet, cash flow statement, taxes, updated guidance. Posted revenue of $1.77 billion for the third quarter, representing a 12% increase year-over-year. Gross margin was 59.1%, a 90 basis point decrease from the prior quarter. The decrease was primarily due to higher product costs. Operating expense as a percentage of sales was 33.3%, a 90 basis point increase.

Operating income was $457 million, a 4% increase. Operating margin was 25.8% 180 basis point decrease compared to prior year quarter. Our GAAP EPS was $2.08, and pro forma EPS was $1.99.

Next, we look at our third quarter revenue by segment and geography. In the third quarter, we achieved double-digit growth in 3 of our 5 segments, led by the Fitness segment with outstanding growth of 30%, followed by Marine segment growth of 20%, Aviation segment growth of 18%. By geography, we achieved double growth in all 3 of our regions, led by 14% growth in APAC, followed by 13% growth in EMEA and 10% growth in Americas.

Looking at operating expenses. Third quarter operating expense increased by $76 million or 15%. Research and development increased by $37 million, SG&A increased by $38 million. Both increases were primarily due to personnel-related expenses.

A few highlights on the balance sheet, cash flow statement, taxes. We ended the quarter with cash and marketable securities of approximately $3.9 billion. Accounts receivables increased year-over-year to approximately $956 million following the strong sales in the third quarter. Inventory increased year-over-year sequentially to approximately $1.9 billion. We're executing our strategy to increase inventory of certain product lines to support strong customer demand as well as mitigate the effects of potential increases in tariffs.

For the third quarter of 2025, we generated free cash flow of $425 million, a $206 million increase on prior year quarter. Capital expenditures for the third quarter of 2025 were $60 million, which is $22 million higher than the prior quarter. We expect full year 2025 free cash flow to be approximately $1.3 billion with capital expenditures of approximately $275 million. During the third quarter of 2025, we paid dividends of $173 million, purchased $36 million of company stock. At quarter end, we had approximately $107 million remaining in the share repurchase program, which is authorized through December 2026. We had an effective tax rate of 21.2% compared to 17.9% in the prior year quarter.

Increase in effective tax rate was primarily due to the new U.S. tax legislation enacted during the quarter, which changed capitalization requirements of certain R&D costs resulting in a year-to-date adjustment due to a decrease in certain U.S. tax deductions and credits.

Turning next to our full year guidance. We estimate revenue of approximately $7.1 billion and gross margin of approximately 58.5%, both of which are consistent with our previous guidance. We now expect our operating margin to be approximately 25.2%, which is higher than our previous guidance of 24.8% due to lower operating expenses. Also, we expect a pro forma effective tax rate to approximately 17.5%, consistent with our previous guidance.

Expected pro forma earnings per share is approximately $8.15 compared to our previous guidance of $8.

This concludes our formal remarks. Bella, can you please open the line for Q&A?

[Operator Instructions] Your first question comes from the line of Joseph Cardoso with JPMorgan.

Maybe, Cliff, I just wanted to start off with, if we could dig into the downward revision to the Outdoor guidance. It looks like the revenue outlook is coming down roughly 10% here in the back half. I was just curious if you could share any additional color on the main drivers behind the deviation from your outlook 90 days ago. I know you touched on the fenix 8 versus Pro dynamic, but any other areas of the portfolio you're seeing sluggishness relative to your earlier expectations? And then I have a follow-up.

Yes. I think our remarks pretty much cover our thinking there. The fenix 8 Pro did launch fairly late in Q3, so it didn't have a lot of time to make an impact. And the results from the fenix 8 release last year were incredibly strong. And so I think that those are all factors as we look at the back half of the year that we're thinking that maybe our expectations were a little bit too high to begin with. But if you look at the long term over several of these major launches like the fenix 7 to fenix 8 and now to fenix 8 Pro, the overall growth of our watch category has been strong double digits and also ahead of the market. And so we feel like in the long-term view that these devices in the Outdoor segment in general has been a remarkable performer.

Got it. And then maybe just switching gears a little bit here. When I look at the implied gross margin guide for 4Q, it appears you're embedding a seasonal step down. However, when we look at the historicals, it's not at the same magnitude that we've seen Garmin produce over a multiyear period, maybe more in line with recent trends. Can we just touch on the drivers behind that? Like what we're seeing in terms of driving a less seasonal decline related to mix? Less aggressive promotions? Is it more on the production side around utilization? Just curious any color you can share there? And then maybe just a quick clarification. Are you -- what are you guys assuming in the guide relative to FX headwinds and then potentially tariffs, if any, that are included in the guide?

Yes. This is Doug. Let me kind of give -- start out with the gross margin maybe first of all, the year-over-year on Q3. That is lower due to higher product costs. Part of that is relating to tariffs. Another thing relates to a strengthening of the Taiwan dollar, which does impact our cost of goods sold, as well as Cliff mentioned, there's warranty accruals like the prior year period sales. And that's partially offset by some favorable FX on sales due to the weakening U.S. dollar.

And as it relates to Q4, if I look at the change basically from last year, this year in Q3, it's about the same change in Q4 there because we do have some of those higher product costs in there that we had to take into consideration. Now we also do have to remember that Q4 versus Q3, Q4 is a more promotional period of time for us, so we did factor that in.

As it relates to some of our assumptions that are in there, as it relates to tariffs, we're factoring what the current tariff rates are out there. We are mitigating that due to certain things such as our higher levels of inventory to offset any potential increases in that. And also as it relates to FX, we did have -- as it relates to the top line, there are some tailwinds there from that standpoint. So we're factoring in similar type of trends in Q4 as we saw in Q3 from that standpoint.

So in Q4, we think it's pretty well consistent with some of the trends that we're currently seeing there with tariffs, with FX, and then Taiwan dollar after consideration as well as the euro and those type of things in there. But as you mentioned, there are a lot of moving parts in gross margin, but we've factored most of those -- all those in that we did know about.

Your next question comes from the line of Erik Woodring with Morgan Stanley.

Cliff, maybe just to start, I'd love if we could maybe take a step back and for you to help us understand where exactly you think we are in the kind of cycle for Fitness and Outdoor? Obviously, a little bit different dynamics for each business, but obviously, really strong performance for multiple years on the back of new product launches and pricing increases. So where do we stand kind of in the cycle for each business? And then I have a follow-up, please.

I think we look at it as an ongoing opportunity and not necessarily as a cycle as in ups and downs, but we are a small but growing market share player in the overall wearables market. We have a very broad and strong product line about -- across both fitness as well as adventure watches. We see the opportunity to continue to grow with market share gains and innovation in our product lines.

Okay. I appreciate that color. And then, Doug, if I could just turn over to you, maybe not necessarily core to any debates, but over the last 3 years, you've kind of guided CapEx up in the $300 million-plus range. And each year, it's kind of ended up lower than that. Just curious, again, kind of where you -- are you not able to find the dollars to spend? Or are there limitations to what you're just able to manufacture and that continues to get pushed out? Would just love a little color about kind of why spending plans are just a little bit lower than you had expected, just a bit of a continuation of '23 and '24.

Yes. Regarding cap expenditure, it's not an item where we don't have the money to spend. We do have $3.9 billion of cash from a standpoint. So it relates to CapEx, those estimates are done at the early part of the year, and we progress those throughout the year. And we have plans for those and sometimes some of those is pushed out. So it's simply a situation that we have expectations for those, just for one reason or the other, things just get pushed out. A lot of -- I should say a lot of those CapEx we have are really infrastructure to grow our business, for manufacturing, those type of things. And so it's just a situation where we come with that estimate and things just change during the year along the way and just kind of push those out.

But but we're not taking anything off the table from a standpoint of CapEx. We still think we need to have that infrastructure for growth in the future.

Your next question comes from the line of Tim Long with Barclays.

Two, if I could as well. First one, could you just touch on kind of channel inventory, what you're seeing there? I think you alluded to inventory related to tariffs a little bit earlier, but particularly in the Fitness and Outdoor segments, how you think the health of the channel inventory looks? And then second, just looking at the number, it looks like there was a little bit of a downtick in the Americas business in the quarter. Could you just touch on what drove that? And do you think there's -- that's a short-term blip or what could get that moving back growing sequentially?

Yes, Tim, I think that we view channel inventory as being healthy at this stage. The registrations and sell-out of our products has been stronger than the sell-in in recent, near-term weeks and months, and I think that's retailers positioning, getting ready to take things in for Q4. But the channel inventory looks very healthy and lean and ready for a good Q4 fill. There's really not a relationship between what we said about inventory and tariffs and channel inventory. When we talk about our inventory and bringing that in ahead of tariff impacts, that's inventory that we hold on our books, whereas the channel is a different consideration. We view the channel as being very lean.

As far as Americas, I think the difference there is that some of the other regions did benefit from FX. So if you adjust for that, they tend to be very comparable.

Okay. So I was just asking about the sequential downtick in Americas. Is that mostly FX? Or was there something else going on there?

Yes. Again, I wouldn't read a lot into that. I think some of that, again, is associated with our product cycles as well as currency movements and all kinds of things. So it's -- there's a lot that goes into that. But I think in general, we're pleased with the performance of all of our geographies.

Your next question comes from the line of Jordan Lyonnais with Bank of America.

I wanted to ask on autos. How should we think about the growth going into next year and until the BMW -- or sorry, the two 2027 contracts start up with new lines that are retiring?

Yes. So going into next year, as we've communicated, we've been in the peak adoption of the BMW program for a while now, actually have anniversaried that. And as some of these end-of-life programs wind down, 2026 could experience some revenue pressure because of those natural dynamics. We expect the new program to come online towards the back half of 2026. And so we're on track for that, and we continue to make progress in delivering that.

Got it. And on Aviation too, was there any greater driver of the growth that you saw between OEM and aftermarket that you could give more detail on?

Yes. I think they're both very comparable, both very strong for different reasons. The backlog in OEM, as you know, is very long. And so aircraft makers are building to that backlog, and we're benefiting from that. And in the aftermarket, the consumer behavior was resilient and people buying and equipping their aircraft. And so the trends are very positive there.

Your next question comes from the line of David McGregor with Longbow Research.

This is Joe Nolan on for David. The fitness business saw another great quarter. Just if you could talk about what's driving the growth there? I know advanced wearables have been strong in recent quarters. And if you could just give any update on new user growth?

Yes. I think we saw growth across both kinds of products that we have in Fitness in terms of wearables that would be the running products as well as the advanced wellness products. And I would say that the registration behavior, the consumer behavior that we see on the registrations is very strong across the whole business, including all of our wearables in Outdoor and Fitness. The convincing majority of people coming to our platform are new users, and we're seeing strong double-digit growth in those registrations in new products year-over-year.

Okay. Great. And then fourth quarter promotions typically step up a little bit for the holiday season. Is it fair to expect a pretty comparable promotional environment compared to last year? Is there any puts and takes to think about within that?

I would say that -- I would call it comparable. We have a lot of products to offer, which is great for retailers because there's something for everyone. And so we have strong promotions planned. I'd say they're in line with what we've seen in previous years, and I think we're really excited about what we have to offer.

Your next question comes from the line of Ivan Feinseth with Tigress Financial Partners.

Congratulations on another record quarter and the great new cadence of -- a new product introduction cadence. On the launch of the Blaze, what kind of uptake have you been seeing so far? And what is your production run projection?

Yes. I think Ivan, Blaze has been great. It's gotten a lot of attention. I think this is a market that is underserved in terms of technology. And at the same time, I think it's a market that's very traditional. So while it's gotten a lot of attention, it will take some time, I think, to build the channel and the momentum there. But we're excited about the early start. And I think we also have plans to enhance the roadmap and offer more products as well.

And what is kind of your target marketing strategy? And I mean, right now, one of the fastest-growing spectator sports is actually rodeos. So there's a lot of interest in horses and of course, traditional horse racing and horse training. So what's kind of your ideas for targeting -- penetrating the market?

Well, I think there's certainly different disciplines around horses. I think if you look at the common threads of each discipline, it's that the horse owners and the caregivers really love the animal, and they want to do the right thing by the animal. And so again, there's been hardly any tools available for people to assess horses, whether it's on the purchasing side, on the selling side of that as well as the training and the ongoing performance improvement of the animal. So I think that lends itself to a lot of opportunities of tools that have been available to people that can be applied to horses going forward.

Then with the launch of the 8 Pro with the satellite inReach connectivity and also on the Bounce, are -- what is the percentage of people buying those that are signing up for the connectivity plans?

Well, I think those two products are specifically designed with connectivity features, so anyone that buys those products is probably going to sign up for the additional services that go along with that, and that's exactly what we're seeing. It does target a unique user case. So if you look at Bounce for example, it's not just a watch for kids, it's a way for parents to monitor their kids and to communicate with them, especially for those that don't want to yet provide a smartphone to their kids. And so it just means that when you buy that product, you will absolutely sign up for the service that goes along with it.

And then with more and more products that you're launching, including inReach connectivity and also more people are signing up for the Messenger. What is kind of your vision for how inReach and the Messenger kind of grows the Garmin ecosystem?

Well, inReach and Messenger and our connected products have all been part of our strategy to offer off the grid communication and especially rescue services for people who are enjoying the outdoors. Things happen out there and consequently having the right equipment and having equipment that works, that connects to real people that can help you has been a unique differentiator for us. So we'll continue to work on products that fulfill that vision and continue to expand our product line.

Good luck for a strong year-end finish.

Your next question comes from the line of Ben Bollin with Cleveland Research.

Cliff, could you talk a little bit about what you're seeing with respect to Auto on the accrued incremental warranty costs that you're seeing? And then any thoughts on where that Auto OEM margin structure looks over time? And then I have a follow-up.

Yes. I think the accrued warranty was an isolated situation where an issue arose in our product that we had to manage, and it did affect prior period sales. So there was a catch-up that went on with that, but that's been addressed and corrected. And I think the longer-term view on the margin structure is the same as what we've communicated before, where we're targeting mid- to upper teens gross margin and mid-single-digit operating margin in the segment when we're at scale.

Okay. And then the other question, with respect to the broader component supply environment, I'm interested if you're seeing any scenarios or situations arise. Notably, advanced process nodes where any availability issues, you feel good on your ability to source memory, components into the out year given kind of the radical demand you're seeing from hyperscale and what they're buying? Any thoughts there.

I think there's definitely some impact you're seeing in the overall semiconductor market associated with these large-scale new initiatives that are going on with AI and data centers and that kind of thing. I think it overall will benefit customers and us in the longer term because semiconductor providers are focusing on more higher performance processors on more dense memory configurations which overall are a benefit to the products going forward with better features, more storage, more capability.

Your last question comes from the line of Noah Zatzkin with KeyBanc Capital Markets.

I guess maybe just on the Marine segment and the raised guidance there, is that purely idiosyncratic? Or is there something in the end market that you see kind of improving underneath that?

Yes, I think the end market is definitely stabilized, if not really even back on an uptick, especially when you look at aftermarket. And so the market dynamic is good at this moment. Consumers seem resilient and interested in the products that we're offering. And there's also an element of market share gains in that, particularly in chartplotters, trolling motors, audio and cartography.

Great. And apologies if you touched on this, but just any thoughts around -- updated thoughts around tariffs would be great.

I think as we mentioned in our remarks, the tariff situation has been mostly stable for today's definition of stable. There can always be changes. But I think in general, we're managing through that. I think we've made all of the short-term adjustments that we had intended to make to our business model. And then going forward, we're focused on longer-term optimizations in our business, which is what we do as the normal course with tariffs or any other matter, we simply are always working to achieve the most efficient supply chain structure.

That concludes our Q&A session. I will now turn the call back over to Teri Seck, Director of Investor Relations, for closing remarks.

Thank you all for joining us today. We are available for callbacks, and we hope you have a great day. Bye.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect. Everyone, have a great day.

Thank you for standing by, and welcome to the Garmin Limited Second Quarter 2025 Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to Teri Seck, Director of Investor Relations. You may begin.

Good morning. We would like to welcome you to Garmin Limited's Second Quarter 2025 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 related transcript will also be available on our website.

This earnings call includes projections and other forward-looking statements regarding Garmin Ltd. and its business. 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. 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-Q and in our Form 10-K filed with the Securities and Exchange Commission.

Presenting on behalf of Garmin Ltd. 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. As announced earlier today, Garmin delivered another quarter of outstanding financial results with strong growth in consolidated revenue, operating profit and earnings. Consolidated revenue increased 20%, exceeding $1.8 billion, which is a new second quarter record, and we experienced double-digit sales growth in every business segment. Gross and operating margins expanded to 58.8% and 26%, respectively, resulting in record second quarter operating income of $472 million, up 38% year-over-year and pro forma EPS of $2.17, up 37% year-over-year.

Yesterday, we announced the acquisition of MYLAPS, a global market leader in timing and performance analysis for athletic motorsports and equestrian competition. MYLAPS supports an impressive customer base, including the Boston Marathon, IRONMAN and Formula 1 racing to name just a few. We believe that the combination of Garmin devices with MYLAPS timing and race management technology will provide a comprehensive experience for our passionate customers from training to race day while also expanding our addressable market. We are very excited to welcome the MYLAPS team to Garmin and look forward to all that we can accomplish together.

We are very pleased with our results so far in 2025, which have exceeded our expectations. From our vantage point, consumers have been resilient and demand for our highly differentiated products has been robust. Given our strong performance, we are updating our full year guidance. We now anticipate revenue of approximately $7.1 billion and pro forma EPS of $8 per share. Doug will discuss our financial results and outlook in greater detail in a few minutes. But first, I'll provide a few remarks on the performance of each business segment.

Starting with fitness, revenue increased 41% to $605 million, with growth led by strong demand for advanced wearables. Gross and operating margins expanded to 60% and 33%, respectively, resulting in operating income of $198 million. During the quarter, we launched the Forerunner 570 and Forerunner 970 with new training features and personalized training plans from Garmin Coach for running and triathlons. These new devices have been enthusiastically embraced by the market and helped drive the remarkable second quarter financial performance of the segment.

We also launched the new Venu X1 with an ultrathin case and class-leading 2-inch display, resulting in a sleek lightweight design that is easy to read and packed with our most popular features. Also during the quarter, we launched several new category-defining products, including the Index Sleep Monitor, the Tacx Alpine gradient simulator and the Varia Vue bike headlight with an integrated 4K resolution camera. Given the first half performance of the fitness segment and the continued demand we are expecting for our advanced wearables, we are raising our revenue growth estimate to 25% for the year.

Moving to Outdoor. Revenue increased 11% to $490 million, with growth driven primarily by adventure watches. Gross and operating margins expanded to 66% and 32%, respectively, resulting in operating income of $158 million. During the quarter, we launched the Instinct 3 Tactical Edition with a bright AMOLED display and metal reinforced bezel, a built-in LED flashlight and support for popular new activities such as rucking. Also during the quarter, we launched new Tread all-terrain navigators that offer larger touchscreens and additional mapping options to enrich off-road adventures. We are pleased with the performance of the outdoor segment so far this year. Looking forward, we expect growth to moderate as we pass the 1-year anniversary of the highly successful fenix 8 launch. With this in mind, we are maintaining our revenue growth estimate of 10% for the year.

Looking next at aviation, revenue increased 14% in the second quarter to $249 million with growth contributions from both OEM and aftermarket product categories. Gross and operating margins expanded to 74% and 25%, respectively, resulting in operating income of $63 million. During the quarter, Embraer recognized Garmin as the top supplier in the electrical and electronic systems category for the 10th consecutive year, validating the long-term investments we have made, creating innovative products and building strong relationships with our customers.

We're also preparing for the future with game-changing new products and features such as the recently announced G5000 PRIME integrated flight deck for Part 25 aircraft and the addition of FAA Data Comm to the GTN 750Xi navigator, which expands the availability of modern digital communications to the aftermarket. We also launched SmartCharts, which has the potential to be one of the most disruptive new products for aviation in quite some time. Using SmartCharts, pilots can see their position on context-specific georeference charts, making instrument approaches much more intuitive and easier to fly.

Also during the quarter, we announced that Garmin Autoland was certified with the Cirrus SR G7+ Series, becoming the first piston-powered aircraft equipped with this award-winning safety system. Given the first half performance of the aviation segment, we are raising our revenue growth estimate to 7% for the year.

Turning to the marine segment. Revenue increased 10% to $299 million with growth across multiple categories, led primarily by chart plotters. Gross and operating margins were 55% and 21%, respectively, resulting in operating income of $63 million. During the quarter, we launched the GPSMAP 15x3 chart plotters with an ultra-wide display that offers as much display area as 2 separate 9-inch chartplotters, making information easier to read while maximizing the use of space in the instrument panel.

Also during the quarter, we launched the quatix 8, our most advanced purpose-built smartwatch for mariners. The marine market has easily surpassed our lowered expectations, demonstrating resilience and stability in an otherwise dynamic macroeconomic environment. Given our first half performance and the current trends in the market, we are raising our revenue growth estimate to 5% for the year.

And moving finally to the auto OEM segment. Revenue increased 16% to $170 million, with growth driven primarily by increased shipments of domain controllers to BMW. Gross margin was 17%, and the operating loss narrowed from the prior year to $10 million. We recently shipped our 1 millionth BMW domain controller from our U.S. manufacturing facility, demonstrating our capability as a respected Tier 1 supplier to the North American automotive market. We also continue to make progress on the launch of our next significant auto OEM program in the second half of 2026. Given the first half performance of the auto OEM segment, we are raising our revenue growth estimate to 10% for the year.

That concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug?

Thanks, Cliff. Good morning, everyone. I'd like to begin by reviewing our second quarter financial results, provide comments on the balance sheet, cash flow statement, taxes and updated guidance. We posted revenue of $1.815 billion for the second quarter, representing a 20% increase year-over-year. Gross margin was 58.8%, a 150 basis point increase in the prior year quarter. The increase was primarily due to product mix. During the quarter, the cost impact from tariffs was not significant, was more than offset by higher revenue associated with the weakness of the U.S. dollar relative to other major currencies. Operating expense as a percentage of sales was 32.8%, 100 basis point decrease. Operating income was $472 million, a 38% increase. Operating margin was 26%, a 330 basis point increase in the prior year quarter. Our GAAP EPS was $2.07, pro forma EPS was $2.17.

Next, we'll look at second quarter revenue by segment and geography. In the second quarter, we achieved double-digit growth in all 5 of our segments, led by the fitness segment with outstanding growth of 41%. By geography, we achieved double-digit growth in all 3 of our regions, led by 25% growth in EMEA, followed by 19% growth in Americas and 16% growth in APAC.

Looking next, operating expenses. Second quarter operating expense increased by $74 million or 14%. Research and development increased approximately $34 million. SG&A increased approximately $40 million compared to prior year quarter. Both increases were primarily due to personnel-related expenses.

A few highlights on the balance sheet, cash flow statement and taxes. We ended the quarter with cash and marketable securities of approximately $3.9 billion. Accounts receivable increased both year-over-year and sequentially to approximately $1 billion following the seasonally strong sales in the second quarter. Inventory increased year-over-year sequentially to approximately $1.8 billion. We are executing our strategy to increase the inventory of certain product lines to support strong customer demand as well as mitigate the effects of potential increases in tariffs.

During the second quarter of 2025, we generated free cash flow of $127 million, $91 million decrease from the prior year quarter, primarily due to an increase in inventory. Capital expenditures for the second quarter of 2025 were approximately $46 million, approximately $9 million higher than the prior year quarter. We expect full year 2025 free cash flow to be approximately $1.2 billion with capital expenditures of approximately $350 million.

During the second quarter of 2025, we paid dividends of approximately $173 million and purchased $67 million of company stock. At quarter end, we had approximately $143 million remaining in the share repurchase program, which authorized through December 2026. We report an effective tax rate of 16.5% compared to 17.9% in the prior year quarter. The decrease in effective tax rate is primarily due to the release of tax reserves.

Turning next to our full year guidance. We estimate revenue of approximately $7.1 billion compared to our previous guidance of $6.85 billion. We expect gross margin to be approximately 58.5%, which is consistent with our previous guidance. We expect the impact from tariffs to be lower than we previously estimated.

However, this favorable impact will be offset by unfavorable foreign currency impacts on product costs due to the strengthening of the Taiwan dollar. We expect our operating margin to be approximately 24.8%, consistent with our previous guidance. Also, we expect a pro forma effective tax rate of 17.5% compared to our previous guidance of 16.5%, which incorporates the impact from the new U.S. tax bill. We expect the new tax bill will result in a decrease in U.S. tax deductions and credits in 2025, primarily due to the change in capitalization requirements of certain R&D costs. Expected pro forma earnings per share is approximately $8 compared to our previous guidance of $7.80.

This concludes our formal remarks. Rob, can you please open the line for Q&A?

[Operator Instructions] Your first question comes from the line of Joseph Cardoso from JPMorgan.

Maybe just for my first question, obviously, you had another strong fitness performance this quarter. I'm trying to get a sense of the outperformance though, particularly as it relates to any potential influences from channel fill. You obviously talked about a lot of new products in the quarter and then potentially any pull forward that you might have visibility into and whether that is having any impact on the back half outlook? And then I have a quick follow-up.

Joe, in terms of channel fill, there's always some channel fill impact when a new product comes out, but we have a broad product line. So it was not a significant factor in driving outperformance. And in terms of pulling forward of demand, we really don't see any of that happening. Retailers aren't willing to take big bets on inventory. And they also have credit limits that are in place that from exceeding limits that we set. So we feel like the channel is well managed. We also monitor the registration of our products, and we can compare our sell-in versus sell-out, and we really don't see any signs of stockpiling.

Got it. I appreciate the color there, Cliff. And then maybe for the second question, just relative to the full year outlook, the implied second half growth for revenue and gross profit is roughly in the 10% range, plus or minus, depending on revenue or gross profit you're looking at there. But you're guiding operating profit dollars to be flat. Can you maybe just flesh that out a bit? Like what are the drivers that's kind of leading to this like a little bit atypical leverage that we're used to seeing from Garmin? And then just maybe just stacking on to that question, any -- can you guys size what you're now embedding for tariffs and then FX relative to the full year guide?

Sure. So I'll give you a little bit background on the operating expense assumptions. And these are for the full year as a percentage of sales, we are expecting that to increase about 30 basis points, maybe about 10 basis points in R&D and 20 basis points in SG&A. And that R&D increase is primarily due to headcount increases as well as normal merit primarily to develop new features and new products. Then as it relates to SG&A, that's going up primarily to build infrastructure for that growth. A few additional items are driving operating expense primarily in the back half here, one of which is a foreign currency impacts. We talked about the foreign currency impacts on the top line revenue, but also there will be increases in expenses due to those foreign currency impacts.

Also, we recently announced the acquisition of MYLAPS, so we'll have the additional expenses relating to MYLAPS in the back half. And also, given our strong performance we have, we have increased performance-based compensation in there. Another one due to the increased revenue is due to co-op advertising that we do have.

As it relates to tariffs, we're currently assuming basically the current rates that are effective for that, our tariff estimate is lower now today than it was in April primarily because of the change in some of those tariffs as well as not having a tariff on wearables from that standpoint. And that's really offset in the gross margin line item by unfavorable impact on our gross margin due to the strength of the Taiwan dollar, which will increase our product costs that we have from that standpoint.

And then as it relates to FX, overall, the FX has moved during the year. So right now, we're expecting FX on a top line revenue to be a favorable item as it was here in Q2 for us.

Your next question comes from the line of Erik Woodring from Morgan Stanley.

I have two. Maybe, Cliff, I'll start with you and just taking a very big step back, looking at your growth CAGR over the last 10 years, revenue growth has been in and around 7% to 8% EPS has been, call it, 11% or 12%, clear leverage in the model. What's interesting about this year is that both last year and this year is you're clearly outperforming that growth rate. But there is some deleverage in the model, which you just kind of explained. But I guess my big picture question is, do you believe that Garmin is entering kind of this new higher revenue growth paradigm, especially as auto OEM is not the headwind that it once was, but in fact, a tailwind to growth. Can you maybe just unpack how you're thinking about Garmin's growth algorithm relative to history? And if there is kind of a true structural change in that growth rate today relative to history? And then a quick follow-up, please.

Yes. I think we've made a lot of progress and evolution in our company over the past 10 years. In the past 10 years, the wearable market has emerged and blossomed. And while we're a smaller market share player, we're gaining share and the market is relatively stable. So that's been a really good opportunity for us. We entered that market because we believed that we had something to offer there, and we have high levels of innovation and differentiation in our product lines that we believe would drive growth. So we continue to see that as an opportunity.

But all over the company and in our segments, we see opportunities in every one of them. And so consequently, we're simply running as fast as we can towards those opportunities and especially when it involves creating unique products that either our competitors aren't interested in or haven't thought of, and we try to be a class leader when it comes to both existing product categories and creating new product categories. So we're excited and optimistic about the future. We believe that there's more work to be done, and we'll continue investing and working hard to achieve it.

Okay. All right. No, that's super helpful. And then maybe as a follow-up, we've seen Garmin make some relatively significant price hikes across a number of different kind of smart wearable products over the last, let's call it, year plus. What have you learned about the elasticity of demand of your customer base? And how does that inform your Garmin's ability to maybe take more price in the future? How should we think about the relative pricing power of the consumer wearables business, please?

Well, I probably would take exception to significant price hikes in the past year. What we've done is we've introduced new product lines with new features that can command a higher price point because they do more for the customer. So we aren't necessarily moving prices on existing categories of products and existing SKUs, we're doing innovation. We're creating new utility for the customer that they're willing to step up and pay for. So unique products, innovation is something that customers always love, and we've been successful in doing that.

In terms of elasticity, I think when we introduce a product at the higher end, our strategy is to continue to push and promote the products that it overlaps with and ultimately replaces. So we have a one-two strategy where we can promote products that have been in the market a while and play on the value side, while at the same time, offering new products with innovation and at higher price points.

Okay. Super helpful. And then maybe, Doug, just one clarification question, which just confirming that within the calendar '25 guide, both overall and at the segment level, the acquisition that you announced overnight is fully included in that guide. That would not be incremental. I just wanted to get that one clarification.

Yes. MYLAPS is actually factored into guidance from the top line as well as the expenses.

Correct.

Your next question comes from the line of Jordan Lyonnais from Bank of America.

Could you guys talk a little bit more about MYLAPS, what you're seeing the opportunity is, where you're expecting synergies just across the segments?

MYLAPS is a company that specializes in timing of competitive events, whether they're running events, triathlons, auto racing or even horse racing. And so their equipment and their services are very critical, especially to some of those high visibility events that are out there. There's a significant overlap with their market interest and our interest in terms of particularly the running and triathlon cycling racing events.

Today, users of our products do a lot of training. And then when they go to race day, they use our devices, but the official timing is somewhat separate and disconnected from the devices that they're using during the race. So we see an opportunity to merge the experiences from the training that takes place leading up to an event through the actual participation in the event itself. And we can do it in a dynamic and integrated way because we now have access to both the unrest information as well as the official timing information.

Your next question comes from the line of Ivan Feinseth from Tigress Financial Partners.

Congratulations on another great quarter. I have two questions. Recently, Health Secretary, RFK has been very outspoken talking about his vision for smart wearables as an integral part of helping people manage their health. And what are your thoughts and the opportunities you see for Garmin because you have a diverse line of wearables with a lot of proprietary measurements as well as the Connect app and the Garmin Health platform.

Well, our thoughts are one of excitement. We have always believed in the utility of wearable devices to help people observe and manage their health. You can't change what you can't measure. So wearables play an integral part of that. And we're really excited about the fact that we have a very diverse product line. So there's not one size fits all for every customer. Instead, we offer a range of things that appeals to somebody's lifestyle and their goals. So I think it presents a significant opportunity for us. And of course, we're at the forefront in terms of sensor measurements and creating health metrics for people that are useful and actionable. And so we believe there's a lot of opportunity going forward.

My second question is the next big thing in smart wearables is glasses that a lot of people believe they will be as ubiquitous as cell phones and watches. And what do you see as your opportunity there, especially for a lot of the ones that are on the market right now don't have screens in the display that is being talked about coming to integrate your data from your watch into that for, let's say, when you're running. And also a while back, you did make a device that clipped on to glasses that kind of created a heads-up display into a pair of glasses. So what are your thoughts on opportunities in that area?

Well, I think it remains to be seen. Glasses have come and gone once and the utility and the concerns around the use of those in public have always come up in the context. So I'd say it's a wait-and-see thing. I think people want choices when it comes to things they wear, including watches and glasses. And so there may be some special use cases for those. But in general, we believe that the utility of a wearable is still very strong.

Your next question comes from the line of Tim Long from Barclays.

Two also, if I could. First, maybe if you could touch a little bit on fitness category. Any color you have on the strength there, how it's looking from kind of repeat users or new installed base for Garmin, if you have any color there? And then secondly, if you could just dig into Europe, you highlighted pretty strong growth there. It's been several quarters of outperformance. Maybe dig into what's driving that and how sustainable that growth can be there?

Okay. Yes. In terms of fitness categories, all the categories were strong. I would say that advanced wearables, as we mentioned in our comments, was the biggest driver. And we did call out running, specifically the 400, 570 and 970, although running was not really the only driver, we saw strength across all of our products, including what we call our advanced wearables, which is our Venu and vívoactive line. So those were very, very strong. In terms of repeat users versus new users, we're seeing a stronger growth in the new user category. So new people coming to Garmin for the first time. And so we're excited by that. It means that people are recognizing that we offer something different and are coming to us for a solution.

In terms of Europe performance, I think if you normalize for FX, you'd probably see that Europe was pretty much in line with the other geographies. So I think FX had part of the responsibility for the outperformance in Europe.

Your next question comes from the line of David MacGregor from Longbow Research.

This is Joe Nolan on for David. The marine market remains relatively soft, but you guys continue to deliver growth there. Can you just talk about some of the factors driving that growth and just what you -- what's giving you confidence in raising the guide there?

I think growth in marine, for sure, the market has been a little bit towards the downside. We feel like it's been stabilizing. It has faced a lot more uncertainty as people try to process, especially boat builders, the issues of tariffs that affect them as well as consumer sentiment. But in general, we've seen stable demand for our products and especially where we're providing products with unique innovation and differentiation, we're seeing people come to Garmin and taking share in those categories as well.

Got it. Okay. And then on the auto OEM side, you mentioned progressing as planned with the new program. Can you just give us an update on where that stands right now?

Well, as I said, we're making good progress on that. We're in the process of validating our production lines globally to be able to support the new device and the new design and to prove that we can run at scale and deliver the quality. So it's a very involved process working with the carmaker and quite a few test runs, pilot runs, evaluations and feedback that goes into making sure we're ready towards the end of 2026.

Your next question comes from the line of Ben Bollin from Cleveland Research.

Cliff, I was hoping we could start. Could you talk a little bit about how you're thinking about the subscription momentum, the materiality, the progress? And what's the right way for us to assess your progress? Do we -- is it as simple as looking at the deferred? Is there something else you think we should look at? Curious your thoughts there. And then I have a follow-up for Doug.

Yes. I think subscriptions are a growing part of our business. We, of course, haven't triggered the 10% threshold to disclose that yet. So we aren't providing specifics on it. But I would tell you that in every segment, we're looking for opportunities to build subscription and service revenues. Outdoor has been a big driver of that with our in-reach system. Fitness has been increasing a lot, both with our kids Bounce wearable as well as Garmin Connect Plus. And then aviation is another one where we offer subscription services for content for the cockpit that is in growth mode. So we're growing across the whole business. And of course, we're driving towards as much as we can grow there. But until it triggers that 10%, we won't disclose it.

Okay. Doug, a follow-up. Just thoughts on working capital management, both in 2Q and the balance of the year, receivables and inventory up decent amount year-over-year and sequential. You've talked a little bit about the trend there. What do you see? How is it going to plan? And any thoughts for the balance of the year? That's it for me.

Yes. As it relates to our working capital really going as planned. As it relates to inventory, our strategy is to have inventory for our increased customer demand, but also we've increased inventory to mitigate potential increases in tariffs. There's currently no tariff on wearables and a potential increase in that. So that was a strategy of ours to increase the inventory.

As it relates to receivables, that's primarily related to the growth in our sales, which is a function of that, maybe a little timing depending upon how the sales came in during the month. But everything from a working capital is pretty well on plan. From a free cash flow estimate for the year, we're expecting at $1.2 billion, which is very similar to what it was last year. We're expecting to have increased operating earnings there that will probably be offset by increase in inventory, but things are going as planned, and we're reacting to the current environment that we're in.

And that concludes our question-and-answer session. I will now turn the call back over to Teri Seck for some final closing remarks.

Thank you all for joining us today. As always, Doug and I are available for callbacks, and we will all talk to you later. Have a great day. Bye.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Ladies and gentlemen, we would like to start the Annual Meeting of Garmin Limited. Good afternoon to those here in Zurich, and good morning to those in North America listening to the webcast. I'm Andrew Etkind, Vice President and Secretary of Garmin Limited, and I am acting as Chairperson for this 2025 Annual General Meeting of Garmin Limited pursuant to Article 16 of the [Technical Difficulty].

I'm sorry. I apologize for technical issues. Also, I'd like to apologize for the delay in starting this meeting. We've had some issues in receiving the final tabulation of the votes from our transfer agent. And we still, at this point, only have preliminary results. So we may have to announce only preliminary results at the end of the meeting and suspend the meeting for hopefully a short time while we wait to receive the final numbers.

But before we commence the formal business of this meeting, I would like to recognize our President and Chief Executive Officer, Cliff Pemble, who will review our achievements in 2024 and also the first quarter of 2025.

Thank you, Andrew, and welcome to those who are joining from Zurich and to our shareholders, who are attending this webcast. Again, our apologies for the delay this morning.

2024 was another very strong year for Garmin. Revenue increased 20% to $6.3 billion, a new record with growth and record revenue in every segment. Gross and operating margins expanded to 58.7% and 25.3%, respectively, resulting in record operating income of nearly $1.6 billion. 2024 was also a year of historical significance for Garmin, marking our 35th year in operation. We were honored to celebrate the legacy of our founders, Gary Burrell and Dr. Min Kao upon their induction into the National Aviation Hall of Fame. This recognition is a fitting tribute to their pioneering work and the foundation they established for Garmin's acclaimed products. Throughout the year and into 2025, we launched many new products and received numerous awards and recognition across our diverse business segments.

Our teams were recognized with multiple accolades, including being ranked #1 in customer support for the 20th consecutive year by both Professional Pilot and Aviation International News. And for the 10th consecutive year, we were recognized as System Supplier of the Year by Embraer Aircraft. We were also named Manufacturer of the Year by the National Marine Electronics Association for the 10th consecutive year and received 6 Product of Excellence awards. We were recognized for the second consecutive year as the most innovative marine company by Soundings Trade Only, a leading trade publication for the recreational boating industry.

Our inReach Messenger Plus SOS satellite communicator was named a 2025 Consumer Electronics Show Best of Innovation winner and our Unified Cabin concept demonstrator was recognized as an innovation award honoree in the in-vehicle entertainment category. These awards and many more are a testament to our associates' passion and commitment to serving our customers and each other.

I'm proud of our accomplishments in 2024 and want to thank Garmin's amazing associates worldwide for their tremendous dedication and hard work. We're off to a fantastic start in 2025, delivering a record-breaking first quarter with double-digit growth in revenue and operating income and a continuation of the positive business trends we've been experiencing over the longer term. With a strong product line and a great team, I'm confident we are well positioned for long-term success.

Thank you again for joining today. I'll now turn the meeting back over to Andrew in Zurich.

Thank you, Cliff. Present with me at this meeting is Mr. Jascha Preuss, who is a partner in the law firm of Wuersch & Gering, which firm was elected as independent voting rights representative by shareholder vote at our 2024 Annual General Meeting. Also present are Mr. Rico Fehr and Ms. Michaela Held of Ernst & Young Limited, Garmin's statutory auditor; Mr. Sandro Bucher, who is a notary public in the Canton of Zurich; and Mr. David Oser and Ms. Margrit Marti, who are both partners in the law firm of Homburger Limited. I have appointed Mr. Oser as vote counter and Ms. Marti as Secretary of the meeting to keep the minutes of this meeting.

I will now report on the organization of this Annual General Meeting and the presence of a quorum. The Board of Directors has invited shareholders to this Annual General Meeting in accordance with Swiss law and our Articles of Association by way of a proxy statement filed with the U.S. Securities and Exchange Commission. The invitation to this Annual General Meeting contains the agenda items and the proposals of the Board of Directors. No shareholder has requested the inclusion of any item or proposal on the agenda of today's meeting.

The Board of Directors fixed the close of business on April 11, 2025, as the record date for this meeting. Shareholders registered in our share register with voting rights at the close of business U.S. Eastern Time on the record date are entitled to attend, vote or grant a proxy to vote at this meeting. In accordance with Swiss law, any additional shareholders, who are registered in our share register at the close of business U.S. Eastern Time on May 27, 2025, are also entitled to attend, vote or grant a proxy to vote at this meeting. Shareholders who registered in Garmin's share register on May 27, 2025, but have sold their shares before the meeting date are not entitled to exercise voting rights with respect to any of the matters to be voted on at this meeting.

A copy of the Garmin Limited 2024 Annual Report to shareholders, which contains the consolidated and statutory financial statements of Garmin Limited for the 2024 fiscal year and the auditor's report has been made available on Garmin's website 20 calendar days before the meeting.

I've received an affidavit from Computershare Communication Services, the company's mailing agent, stating that notice of this Annual General Meeting, together with the proxy statement, proxy card, annual report and return envelope, were duly mailed by Computershare to all shareholders of record as of the applicable record date who elected to receive notice by mail.

At the request of the independent voting rights representative, Wuersch & Gering, and in accordance with Article 689c, Paragraph 5 of the Swiss Code of Obligations, I inform all shareholders present or represented at this meeting that Wuersch & Gering shared with us the aggregate for, against and abstain voting instructions of shareholders of record on each proposal on today's agenda today and therefore, not earlier than 3 business days before the date of this meeting.

Proposals 1 through 14 at this annual meeting, each requires the affirmative vote of a majority of the votes cast, excluding unmarked, invalid and non-exercisable votes and abstentions. Proposal 15 requires the affirmative vote of at least 2/3 of the votes and the absolute majority of the par value of shares each is represented at this meeting. An abstention blank or invalid ballot will have the effect of a vote against Proposal 15.

We will now proceed to ascertain whether a quorum is present. Under Garmin's Articles of Association, the quorum for a General Meeting of Shareholders is the presence in person or by proxy of at least a majority of the total number of shares entitled to vote at the general meeting of the shareholders. As of May 27, 2025, there were 192,480,416 shares of Garmin Limited issued and outstanding, which number excludes 2,420,549 treasury shares.

Mr. Oser, please could you now report the number of shares represented at this meeting?

Thank you. There are present in person or represented at this annual meeting, 146,634,854 shares or 76.19% of the issued and outstanding shares of Garmin Limited entitled to vote at this Annual General Meeting, of which -- all of which are represented by the independent voting rights representative.

Thank you. A majority of the outstanding shares entitled to vote at this meeting is represented. Therefore, a quorum is present, and today's meeting is validly constituted.

We will now proceed with the formal business of this meeting. We will follow the order of business listed in the agenda. The first item on the agenda is the proposal for approval of Garmin's 2024 Annual Report, including the consolidated financial statements and the statutory financial statements of the company for the 2024 fiscal year.

Mr. Fehr and Ms. Held of Ernst & Young Limited has informed me that Ernst & Young does not have anything to add to its audit report.

Mr. Oser, please could you report the preliminary voting results on this proposal?

Proposal 1, approval of the 2024 Annual Report has been approved with approximately 99.83% of the votes cast.

Thank you. We now move to proposal 2, which is to approve the appropriation of available earnings. The full text of this proposal is contained in our proxy statement.

Mr. Oser, please could you report the voting results on Proposal 2.

Proposal 2, approval of the appropriation of available earnings has been approved with approximately 99.94% of the votes cast.

Proposal 3 on the agenda is the approval of a cash dividend in the aggregate amount of $3.60 per outstanding share to be paid out of the company's reserve from capital contribution in 4 equal installments on dates to be determined by the Board of Directors. The full text of the proposal is contained in our proxy statement. Ernst & Young Limited has confirmed that in their opinion, the distribution proposed by the Board complies with Swiss law and the company's Articles of Association. In addition, Mr. Fehr of Ernst & Young Limited has informed me that Ernst & Young Limited has no additional comments on its confirmation regarding the dividend proposal of the Board of Directors.

Mr. Oser, please could you report the preliminary voting results on Proposal 3.

Proposal 3, approval of the payment of a cash dividend has been approved with 99.94% of the votes cast.

Thank you, Mr. Oser. We now move to proposal 4, which is the proposal to discharge the members of the company's Board of Directors and the executive management from liability for their activities during the 2024 fiscal year. It is customary for Swiss companies to include such a proposal on the agenda of their Annual General Meetings of Shareholders. The discharge is only effective with respect to facts that have been disclosed to shareholders and it only binds shareholders who either voted in favor of the proposal or who subsequently acquired shares with knowledge that shareholders have approved this proposal. In accordance with Swiss law, members of the company's Board of Directors and executive management cannot vote on the discharge of liability. So the number of votes cast on this proposal will be lower than on the other proposals.

Mr. Oser, please, could you report the voting results on proposal 4?

Proposal 4, discharge of the directors and executive management from liability for activities during the 2024 fiscal year has been approved with 98.96% of the votes cast.

Thank you. Proposal 5 on the agenda is the proposal to reelect 6 directors. The Board of Directors has nominated Susan M. Bull, Jonathan C. Burrell, Joseph J. Hartnett, Min H. Kao, Catherine A. Lewis and Clifton A. Pemble for reelection for a term extending until completion of the next Annual General Meeting. Voting is for each director nominee separately.

Mr. Oser, please could you report the preliminary voting results on this proposal?

All 6 nominees to the Board of Directors pursuant to proposal 5 have been elected with no less than 80% -- 80.26% of the votes cast.

Thank you. Proposal 6 on the agenda is the reelection of the Chairman. The Board has nominated Dr. Min Kao, who is currently the Executive Chairman of Garmin, for reelection as Chairman for a term extending until completion of the next Annual General Meeting.

Mr. Oser, please can you report the preliminary voting results on this proposal?

Proposal 6, Dr. Min Kao's reelection as Chairman has been approved with 92.66% of the votes cast.

Thank you. We now move to proposal 7, which is the reelection of 4 members of the Compensation Committee of the Board of Directors. The Board has nominated Susan Ball, Jonathan Burrell, Joseph Hartnett and Catherine Lewis for reelection as members of the Compensation Committee for a term extending until completion of the next Annual General Meeting. Again, voting is for each nominee separately.

Mr. Oser, please could you report the preliminary voting results on this proposal?

All 4 nominees for election to the Compensation Committee pursuant to Proposal 7 have been elected with no less than 82.03% of the votes cast.

Thank you. Proposal 8 on the agenda is the proposal to reelect the independent voting rights representative. The Board has proposed that the New York law firm of Wuersch & Gering LLP be reelected as the independent voting rights representative for a term extending until completion of the next Annual General Meeting. Wuersch & Gering has lawyers who have experience in Swiss as well as U.S. legal matters. Wuersch & Gering does not perform any other services for Garmin.

Mr. Oser, please, could you report the voting results on this proposal #8.

Proposal 8, reelection of the independent voting rights representative has been approved with approximately 99.06% of the votes cast.

Thank you. We now turn to Proposal 9 on the agenda, which is the proposal to ratify the appointment of Ernst & Young LLP as Garmin's independent registered public accounting firm for the 2025 fiscal year and to reelect Ernst & Young Limited as Garmin's statutory auditor for a further 1-year term.

Mr. Oser, please could you report the preliminary voting results on this proposal?

Proposal 9, ratification of the appointment of Ernst & Young LLP as the company's independent public accountant and the reelection of Ernst & Young Limited as statutory auditor has been approved with 94.95% of the votes cast.

Thank you. The next proposal #10 is the proposal for an advisory resolution approving the compensation of Garmin's named executive officers as disclosed in the proxy statement of this Annual General Meeting.

Mr. Oser, please could you report the preliminary voting results on proposal #10?

Proposal #10, advisory vote on executive compensation has been approved with 84.62% of the votes cast.

Thank you. The next proposal #11 is an advisory vote on the 2024 Swiss statutory compensation report. Under Swiss law, we are required to prepare a separate Swiss statutory compensation report each year that contains specific items in a presentation format determined by Swiss law. A copy of the Swiss statutory compensation report is contained in Annex 1 of the proxy statement for this meeting.

Mr. Oser, please could you report the preliminary voting results on this proposal?

Proposal 11 advisory vote on the Swiss statutory compensation report has been approved with 85.16% of the votes cast.

Thank you, Mr. Oser. The next proposal #12 is an advisory vote on the 2024 Swiss Statutory nonfinancial matters report. Under Swiss law, we are required to prepare a statutory and nonfinancial matters report each year that contains items determined by Swiss law. A copy of the Swiss statutory nonfinancial matters report is contained in Annex 2 of the proxy statement for this meeting.

Mr. Oser, please can you report the voting results on proposal -- the preliminary voting results on proposal #12.

Proposal 12, advisory vote in the Swiss statutory nonfinancial matters report has been approved with 98.66% of the votes cast.

Thank you. Proposal #13 is to approve the fiscal year 2026 maximum aggregate compensation for the executive management as required by Swiss law under Articles of Association and as disclosed in the proxy statement for this Annual General Meeting.

Mr. Oser, please could you report the preliminary voting results on proposal #13.

Proposal #13, binding vote to approve fiscal year 2026 maximum aggregate compensation for the executive management has been approved with 86.58% of the votes cast.

Thank you. We now move to Proposal 14, which is the proposal to approve the maximum aggregate compensation for the Board of Directors for the period between this 2025 Annual General Meeting and the 2026 Annual General Meeting as required by Swiss law and our Articles of Association and as disclosed in the proxy statement for this meeting.

Mr. Oser, please could you now report the preliminary voting results on this proposal?

Proposal #14, the binding vote to approve maximum aggregate compensation for the Board for the period between the 2025 Annual General Meeting and the 2026 Annual General Meeting has been approved with 89.6% of the votes cast.

Thank you. The final proposal, Proposal 15 is to renew the capital band. Pursuant to Swiss law under a capital band, the Articles of Association of the company may authorize the Board of Directors for a maximum period of 5 years to increase the stated share capital to a maximum of 150% and/or to reduce it to a minimum of 50% of the stated share capital. The Board of Directors believes it is advisable and in the best interest of Garmin for the shareholders to amend the Articles of Association in order to reauthorize the Board of Directors for a maximum period of 1 year to increase the stated share capital to a maximum of 120% and/or to reduce it to a minimum of 90% of the existing stated share capital of the company.

If Proposal 15 is approved, we would nevertheless seek shareholder approval for share issuances to the extent required under New York Stock Exchange rules. And under current New York Stock Exchange rules, shareholder approval is generally required with certain enumerated exceptions to issue common shares or securities convertible into or exercisable for common shares in one or a series of related transactions if such common shares represent 20% or more of the voting power of outstanding common shares of the company.

New York Stock Exchange rules also require shareholder approval for an issuance of shares that would result in a change of control of the company as well as the share issuances in connection with certain benefit plans or related party transactions. Our Board believes that it is customary for public companies incorporated in Switzerland to maintain an authorization for the Board to issue shares and that the reauthorization of the capital band is prudent to ensure that Garmin maintains financial flexibility.

The adoption of the capital band does not mean that there will be any increase in share capital. The Board does not currently have any plans to issue shares out of the capital band. The share capital would only be increased if and when the Board makes use of this authorization. The resolution for the reauthorization of the capital band requires the approval of a qualified majority of at least 2/3 of the votes and an absolute majority of the nominal value of the shares each as represented at the annual meeting. The proposed shareholder resolution and the proposed amendments to the Articles of Association are included in Annex 3 of the proxy statement for this meeting.

Mr. Oser, please, could you report the preliminary voting results on Proposal 15?

Based on preliminary voting results, Proposal 15 reauthorization of the capital band has been approved with approximately 97% of the voting -- of the votes represented at this meeting. We will announce the final results subsequently after a short break, I believe.

Yes. Thank you, Mr. Oser. As Mr. Oser mentioned, we still have to verify from our transfer agent some of the final figures for the votes. We will publish in our Form 8-K within a few business days after this meeting, the final votes for proposals 1 through 14. And we will suspend this meeting for hopefully a short time while we confirm with the transfer agent the final figures for proposal #15, and we will announce them later on at this meeting as soon as we receive them.

So we will suspend this meeting while we await the final numbers for proposal #15. I will put our microphone on vote, and we will come back as soon as we have the final numbers for proposal #15.

[Break]

I apologize again for the delay in continuing the meeting. Again, we were waiting for -- there were some technical issues in receiving the required information from our transfer agent, which we now do have.

So I would now ask Mr. Oser, please to report the final voting results on proposal #15.

Proposal 15, which is the reauthorization of the capital band has been approved with 141,936,204 votes corresponding to 96.8% of the votes represented at the meeting, 3,446,090 against votes corresponding to 2.35% of the votes represented at this meeting and 1,252,559 votes corresponding to 0.85% of the votes represented at this meeting. Therefore, the necessary 2/3 majority of the votes represented and the absolute majority of the nominal share capital represented at this meeting have been achieved.

Thank you very much, Mr. Oser. I can therefore confirm that all proposals, including Proposal 15, for which a public deed must be established, have been approved by Garmin shareholders with the required majorities. And this concludes the results of the voting.

The final voting results on all proposals on the agenda will be filed with the SEC on a Form 8-K report within 4 days of this meeting and will be publicly available on Garmin's website. So this concludes the meeting. We thank you again for your interest in Garmin. We wish you a good weekend, and we look forward to another successful year.

This concludes today's meeting. You may now disconnect.