Garmin Ltd. (GRMN) Earnings Call Transcript & Summary

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.