Garmin Ltd.

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. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Terry Sec, Director of Investor Relations. Terry, 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. 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 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 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 three 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 RearView 820, our brightest and most powerful radar taillight 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. Phoenix 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, recognized 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 SpyPol. allowing anglers to see a bird's eye view of fish and underwater structure in every direction. Also during the quarter, we launched the QUADX 8 Pro, our purpose-built nautical smartwatch with in-reach technology for two-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 AutoEM 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 gap 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 garments. That concludes my remarks. Next, Doug will walk you through additional details on our financial results.