Garmin Ltd.

Thank you for standing by. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Garmin Limited second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, you can press star one again. Thank you. I will now turn the floor over to Terri Sec, Director of Investor Relations. Terri, you may begin.

Good morning. We would like to welcome you to Garmin Limited's second quarter 2024 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. 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, futures, dividends, or share repurchases, 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 case 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 Besson, 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 delivered another quarter of outstanding results with double-digit growth in consolidated revenue, and operating income. Consolidated revenue increased 14% to $1.51 billion, a new second quarter record with three business segments reporting strong double-digit growth. Gross margin was 57.3%. Operating margin expanded to 22.7%, resulting in operating income of $342 million up 20% year-over-year. We reported pro forma EPS of $1.58, up 9% over the prior year, which is a remarkable result considering the significantly higher effective tax rate. During the quarter, our global employment surpassed 20,000 associates, and we were recognized as a top employer by Forbes, as well as US News and World Report. We are proud of our associates who dedicate themselves to delivering growth through innovative and highly differentiated products. Given our strong performance in the first half of the year, we are updating our full year guidance. We now anticipate revenue of approximately $5.95 billion and performance EPS of $6. 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 28% to $428 million, primarily driven by wearables. Gross and operating margins improved to 57% and 25%, respectively, resulting in operating income of $108 million. During the quarter, we launched the Edge 1050 Premium Cycling Computer with a vivid color touchscreen display, a built-in speaker for audible feedback, and Garmin Pay mobile payments. Also during the quarter, we celebrated Global Running Day with Garmin users running nearly 11 million miles, beating last year by more than 2 million miles. Given the strong performance of the fitness segment, we are raising our revenue growth estimate to 20% for the year. Moving to outdoor, revenue decreased 2% to $440 million, primarily driven by lower revenue from adventure watches following the anniversary of the Fenix and Epyx Pro Series launch. Gross and operating margins were 65% and 31%, respectively, resulting in operating income of $136 million. During the quarter, we launched the Approach Z30 Smart Laser Range Finder with the Range Relay feature, which sends distance measurements to a compatible Garmin smartwatch or the Garmin Golf smartphone app. We also launched our first cellular-based dog tracking collar, the Alpha LTE. This small rugged device attaches to existing dog collars and pairs with the alpha app so users can view their dog's movement from a smartphone or an alpha handheld device. The outdoor segment has performed as we anticipated so far this year, and we expect growth to accelerate in the back half of the year with new product launches. As such, we are maintaining our 7% revenue growth estimate for 2024. Looking next at aviation, revenue was relatively flat in the second quarter at $218 million. We continue to see growth in OEM product categories, while the aftermarket decline in an ongoing normalization following the somewhat uneven results of the prior year. Growth and operating margins were 74% and 23%, respectively, resulting in operating income of $50 million. For the ninth consecutive year, we were recognized by Embraer as the best supplier, most recently in the electrical and electrical systems category, for our G3000 Prodigy Touch flight deck in the Phenom 100EV and Phenom 300E. The aviation segment has performed as expected so far this year, and we are maintaining our estimate of flight revenue in 2024. Turning to the marine segment, revenue increased 26% to $273 million, primarily driven by the acquisition of JL Audio. Excluding JL Audio, revenue increased approximately 7%, outperforming widely reported market trends. Gross and operating margins improved at 54% and 22%, respectively, resulting in operating income of $60 million. We recently expanded the Forest Kraken trolling motor series, adding a 48-inch shaft length to accommodate a broader range of boat sizes. We also expanded our ice fishing offerings with the Panoptix PS22 ice fishing bundle, an ultra-portable live sonar solution for winter fishing, which won a Best of Category award at this year's ICAST, the world's largest sport fishing trade show. This is our fourth consecutive win in the ice fishing category and seventh consecutive award at ICAST. Additionally, in the quarter we were once again selected as an exclusive supplier to Independent Boat Builders Incorporated through 2029 for both traditional marine electronics as well as audio equipment. Given the strong performance of the marine segment, we are raising our revenue growth estimate to 15% for the year. And moving finally to the Auto OEM segment, revenue increased 41% to $147 million, primarily driven by growth in domain controllers. Gross margin was 16%, and the operating loss decreased to $12 million. Our Auto OEM segment continues to be recognized as an outstanding partner. We recently received the 2024 Global Award for Excellence in Technology and Development from Yamaha Motor for our motorcycle infotainment solutions. Auto OEM has performed as expected so far this year, and we are maintaining our 50% revenue growth estimate for 2024. So that concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug?