Garmin Ltd.

Good morning. We would like to welcome you to Garmin Limited's first quarter 2019 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. An archive of the webcast and related transcripts will also be available on our website. In the first quarter of fiscal 2019, we refined the methodology used to allocate certain selling, general, and administrative expenses to the segments. the composition of segments did not change. Prior year amounts are presented as they were originally reported as it is not practicable to accurately restate prior period activity in accordance with the refined allocation methodology. For comparative purposes, we have included in the appendix of this webcast an estimate of the segment operating income impact if the refined allocation methodology would have been used In 2018, for both the 13 weeks ended March 31, 2018, and the 52 weeks ended December 29, 2018. There was no change to either the consolidated SG&A expenses nor the consolidated operating income. This earnings call includes projections and other forward-looking statements regarding Garmin Limited and its business. Any statements regarding our future financial position, revenues, earnings, gross and operating margins, and future dividends, market shares, product introductions, 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 Limited this morning are Cliff Pimble, President and Chief Executive Officer, and Doug Bassin, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pimble.

Thank you, Terri, and good morning, everyone. As announced earlier today, Garmin reported record revenue for the first quarter of 2019 with growth in operating income and EPS. Consolidated revenue came in at $766 million, up 8% over the prior year. Revenue from marine, aviation, fitness, and outdoor collectively increased 12% year-over-year. Gross margin was 59% compared to 60% in the prior year. Operating margin was 19.8%, and operating income grew 6% over the prior year. This resulted in GAAP EPS of 74 cents, pro forma EPS was 73 cents, up 7% over the prior year. We are encouraged by our first quarter results. Since Q1 represents the lowest seasonal quarter of our financial year, and much of the year remains ahead of us, we are maintaining the guidance issued in February. Before moving on to segment highlights, I want to mention the recognition we received recently from Forbes, who ranked Garmin as one of the top five best employers in America. Speaking on behalf of all Garmin employees, we are truly honored to receive this recognition. Garmin employees are passionate about what we do, and we share a deep commitment to serving our customers and each other. Of the many qualities that make Garmin a great place to work, it's the commitment of our employees that sets us apart. Moving next to our segment highlights, revenue in the marine segment increased 18% on strong demand for chart plotters, and Panoptix LiveScope sonars. Gross margin was 58%, and operating margin improved to 19%. During the quarter, we announced the Ecomap Ultra Series, combining built-in Panoptix LiveScope compatibility with new mapping content. Also, in our first year as their exclusive electronics supplier, we were named the 2018 Supplier of the Year by Independent Boat Builders, Inc., the boating industry's largest purchasing cooperative. It's an honor to be recognized by the IBBI, and I want to thank our marine team for delivering superior products, service, and support to our customers. Looking next at aviation, revenue increased 17%, driven by growth in both aftermarket and OEM product categories. Growth and operating margin remained strong at 75% and 34%, respectively. During the quarter, we delivered the new G1000 NXI upgrade for the Citation Mustang, which was the first business jet to adopt our G1000 system. We announced compelling new products, such as the GPS 175, GNX 375, and the G3X Touch, which expand the addressable market for our retrofit systems. Our aviation team was also recognized as an outstanding supplier to the industry. At the recent Embraer Suppliers Conference, we were named supplier of the year for electrical systems. This is the 10th supplier award we've received from Embraer, and again reflects the strength of our products, service, and support. I want to thank our aviation team for their deep commitment to being the very best. Looking next at fitness, revenue increased 9%, driven primarily by strong growth in our wearable categories. Gross margin was 50%, and operating margin was 10% in the quarter. Margins decreased due to a combination of factors, including lower selling prices and a shift in mix as certain products in our consumer wellness categories experienced significant year-over-year growth. In early April, we completed the acquisition of Tacx, expanding our reach into the indoor cycling and training markets. Yesterday, we announced a fully refreshed line of running watches with the Forerunner 45 in two sizes, the Forerunner 245 with optional music storage, and the Forerunner 945, which has it all. These new smart watches offer features that will appeal to a broad range of running enthusiasts. Also, we announced the availability of our menstrual cycle tracking feature. This new feature was developed by Garmin Women, focusing on the special needs of those who are highly active. This feature will help women make the connection between their current cycle phase, physical and emotional symptoms, and their overall well-being. We also announced that we are cooperating with the University of Kansas on research to better understand how wearables and the biometric data they produce can help women manage and improve their health. Moving to outdoor, revenue increased 7% on strength across multiple product categories. The outdoor segment generated strong growth in operating margins of 63% and 27%, respectively. During the quarter, we introduced MARC, a collection of five premium smart tool watches. These watches were created from our active lifestyle DNA to inspire adventures in flying, racing, sailing, exploring, and sports performance. Also, we recently announced the Approach S40, a stylish golf watch featuring a color touchscreen display and smartwatch capabilities. Looking finally at the auto segment, revenue decreased 10% for the quarter due to the ongoing decline of the P&D market, partially offset by growth in certain specialty product lines. Our global P&D market share remains very strong. Gross margin was 45%. and operating margin improved to 6%. During the quarter, we launched the BC40, a new wireless backup camera that's easy to install and provides drivers with a wide, clear view behind their vehicle. Also during the quarter, we announced that BMW selected us as their lead design and production partner of infotainment modules for the BMW Group, validating us as a Tier 1 supplier to the world's most respected brands. I congratulate our automotive team and thank them for their hard work and dedication in securing this win. That concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug?