Garmin Ltd.

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 Limited Third Quarter 2025 earnings 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, then the number one on your telephone keypad. To withdraw your question, press star 1 again. I would now like to turn the conference over to Terry Sack, 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. 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 purchases, 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 Besson, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pemble.

Thank you, Terry, 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 an increase of 15 cents 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 geofencing alert, and the Venufor 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 one-year anniversary of the diesel series launch, as well as the highly successful Phoenix 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 micro LED display. MicroLED has been highly sought after for its superior brightness and viewability, and the Phoenix 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 horse's 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 one-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-day 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 auto land and auto throttle capability to the King Air 350, which is the largest and most complex aircraft to receive auto land 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 chart plotters, 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 chart plotter, 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 eight Product of Excellence awards, ranging from chart plotters to marine smartwatches, reflecting the strength and diversity of our product line-up. 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 three millionth BMW domain controller, demonstrating our capability as a respected tier one 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-day 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.