Garmin Ltd.

Hello, everyone. Thank you for joining us and welcome to the Garmin Limited third quarter 2026 earnings. 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 Teri Seck, Director of Investor Relations. Please go ahead.

Good morning. We would like to welcome you to Garmin Limited's third 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 slash investors. An archive of the webcast and related transcript will also be available on our website. Thank you for joining us. The forward-looking events and circumstances discussed in this Ernest 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 Clif 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 Clif Pemble.

Thank you, Teri, and good morning, everyone. As announced earlier today, Garmin achieved another quarter of record-breaking financial results in a continuation of the positive trends we've been experiencing over the long term. Consolidated revenue increased 12% to nearly $2 billion, with gross margin of 63.3%. We experienced a robust expansion in consolidated gross and operating margins, The majority of which is attributable to favorable segment mix and lower product costs. Margins also benefited from tariff refunds of $33 million recognized in the third quarter. Even when excluding this benefit, our gross margin performance was impressive by any historical comparison, reflecting the strength of our product lines and the efficiency of our vertically integrated business model. Through strong operational execution, we delivered significant leverage to the bottom line. Operating income increased 34% to $612 million, and pro forma EPS increased 39% to $2.76. With most of 2026 behind us and considering the momentum we are experiencing entering the important Q4 holiday season, We anticipate delivering another record year of double digit growth in revenue and profits. We now anticipate revenue of $8.15 billion, an increase of $100 million over the prior guidance, and an increase of 12% over the prior year. We expect gross margin of 61% for the full year, which assumes higher costs for raw materials, particularly memory. which I will expand upon in a moment. We further expect an operating margin of 29%, an expansion from our prior estimate, and a tax rate of 16.5%, which is unchanged from our prior estimate. These assumptions result in pro forma EPS of $10.80, an increase of 80 cents over the prior guidance, and a 26% increase over the prior year. Before covering segment highlights, I want to provide additional context on supply chain matters. As previously mentioned, our results will soon reflect the higher cost of memory and other raw materials, which have increased significantly since last year, driven by both high demand and limited supplies. Our results have benefited from our safety stock of memory purchased at lower prices. New supplies are being purchased at current market prices, which are significantly higher than last year. This represents a headwind going forward and drives higher inventory amounts on our balance sheet. Additionally, our inventory strategy is focused on product availability, which translates to higher inventory levels of certain critical components. And from time to time, we make prepayments to secure additional supplies. While it's too early to offer a comprehensive outlook for 2027, we expect our consolidated gross margin profile will return to a historical range primarily due to higher memory costs. We believe a return to historical gross margin levels represents impressive performance given the unusual supply chain circumstances affecting many companies. As we formulate our 2027 plan, We will look for every opportunity to offset this headwind by leaning heavily on our vertical integration and scale of operations and through strategic and selective mitigations, which we have successfully used in the past. 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 16% to $694 million, a new third quarter record primarily driven by broad-based wearable growth. Gross and operating margins expanded to 63% and 33%, respectively, resulting in operating income of $231 million. During the quarter, we launched the Circa Smartband, a screenless wearable offering rich wellness and fitness insights that expands our addressable market for wellness devices. Initial demand for Circa has been very strong and feedback from customers has been positive. We recently announced the next generation Edge cycling computers. The Edge 1060 features a built-in microphone and speaker for hands-free voice control. and the easy to use Edge Explore 3 is designed for riders of all levels. The fitness segment has achieved outstanding performance throughout the year and we expect this trend to continue in the fourth quarter. We are very pleased with these results and expect that the fitness segment will be the strongest contributor to our full year consolidated growth. Moving to outdoor, revenue increased 20% to $597 million, primarily driven by strong demand for adventure watches following the launch of the Fenix 9 series. Gross and operating margins expanded to 68% and 39% respectively, resulting in operating income of $233 million. During the quarter, we launched the Fenix 9 and the Fenix 9 Pro series, with an all-titanium watch case option and the largest available AMOLED screen in our flagship Adventure Watch lineup. We also launched the Garmin Drive Navigators that feature high-resolution ultra-wide displays and an elevated all-new user experience. Looking forward, we expect growth momentum to continue in Q4, primarily driven by the Fenix 9 series. resulting in improved full-year growth rates when compared to 2025. Looking next at aviation, revenue increased 5% to $253 million with growth primarily driven by OEM product categories. Gross and operating margins expanded to 78% and 26% respectively resulting in $66 million of operating income. We recently announced that the G1000 integrated flight deck for the iconic King Air aircraft has surpassed 1,000 systems in the field, marking a significant milestone as one of the most successful retrofit flight deck programs in aviation history. We also announced that more than 2,500 aircraft are now equipped with our revolutionary Autoland system. Autoland is available in more than 15 models from piston-powered aircraft to twin-engine jets, bringing added peace of mind to a growing number of pilots and passengers across the aviation industry. Just this quarter, Pilatus Aircraft and Epic Aircraft announced the certification of Garmin Autoland on the PC-12 Pro and the E1000 airplanes. During the quarter, we introduced the G2000 Prime, bringing prime flight deck functionality to the high performance piston and electric aircraft market. Also during the quarter, we announced the certification of an all glass retrofit cockpit for the original Cessna Citation jet. And finally, we made important updates to Garmin Pilot, adding smart charts coverage for Canada and Mexico, as well as mobile clearance delivery, which allows pilots to obtain clearances electronically through the Garmin Pilot app. We are pleased with the performance of aviation during the first three quarters of the year, and we expect fourth quarter year-over-year growth to be similar to that of Q3. Turning to the marine segment, revenue increased 16% to $310 million with broad-based growth across multiple product categories, led by Sonar Products following the launch of LiveScope 2 sonar systems. LiveScope is widely considered to be one of the most consequential innovations in modern fishing electronics. LiveScope 2 builds on this legacy of disruptive innovation by offering improved range and unprecedented image clarity. Gross and operating margins expanded to 64% and 30% respectively resulting in operating income of $94 million. The primary driver of margin expansion was the tariff refund recognized during the quarter, although margins improved even when excluding this benefit. During the quarter, we expanded our sailboat product lineup with the GMI 40 instrument display and the SmartDrive steering actuator. We also launched the JL Audio A60 head unit series and the M200 speaker system. We were recently named manufacturer of the year by National Marine Electronics Association for the 12th consecutive year, an honor that's particularly meaningful because it reflects the opinions of the broader NMEA community for innovation, product quality, service and support. We also received six Product of Excellence awards for multiple product categories as selected by NMEA dealers, certified installers, and industry professionals. We are pleased with the performance of Marine during the first three quarters of the year and believe we are on track to achieve full year growth that is consistent with the prior year. Moving finally to the auto OEM segment, revenue decreased 20% to $132 million, primarily driven by domain controllers. Gross margin was 16% and the operating loss narrowed year over year to $12 million as we shifted R&D resources to other segments. We expect fourth quarter revenue to decrease year over year consistent with Q3 as domain controllers continue to decline as expected. We look forward to the launch of our next major domain controller program with Mercedes-Benz, which we expect will drive significant growth in 2027. Wrapping up, I'm very proud of what our team has accomplished. We delivered strong growth, expanded profitability. We invested in future innovation and introduced new products across nearly every segment of our business. We look forward As we look forward, our product portfolio is very strong and we are confident in the opportunities that lie ahead. We believe success is driven by our commitment to create products that are essential to our customers and supporting them with industry leading quality, reliability and innovation. So that concludes my remarks. Next, Doug will walk you through additional details on our financial results.