Garmin Ltd. GRMN reported better-than-expected first quarter 2016 results with revenues and earnings surpassing our estimates. Earnings of 49 cents per share surpassed the consensus mark by 14% and revenues of $624.04 by nearly 6%. Revenues Garmin’s first quarter revenues of $624.04 million were down 20.1% sequentially but up 6.6% year over year. Revenues, in particular, were helped by higher demand for marine, outdoor, fitness and aviation devices. Revenues by Segment Garmin’s Auto/Mobile, Fitness, Aviation, Outdoor and Marine segments generated 31%, 23%, 17%, 16% and 13% of quarterly revenues, respectively. Seasonality results in considerable variations in Garmin’s quarterly revenues. The Auto/Mobile segment was down 27.1% sequentially and 9.5% on an year-over-year basis. The year-over-year decrease, in line with expectations, was due to the shrinking of the personal navigation device (PND) market and headwinds caused by additional revenue deferrals. The Fitness segment decreased 37.7% sequentially and increased 8.7% year over year. The year-over-year increase has mainly been driven by robust growth of Garmin Elevate wrist heart rate technology products and offset by lower multisport revenues. Aviation segment revenues were up 2.2% sequentially and 8.4% year over year. The growth has mainly been driven by introduction of new products and new client acquisitions. In the quarter, the company started providing avionics to the U.S. Forest Service’s fleet of Sherpa aircraft and AirEvac’s fleet of Bell helicopters. Outdoor revenues were down 21.7% sequentially and up 27.5% year over year. The year-over-year growth was driven by the strength of our fenix line of wearables and dog products. The Marine segment increased 46.8% sequentially and 28.9% year over year. It was driven by strength in chartplotter and fish finder product lines. Revenues by Geography While America generated 51% (down 22.9% sequentially but up 4.2% year over year) of total revenue, EMEA and APAC contributed 36% (down 16% sequentially but up 8.3% year over year) and 13% (down 19.6% sequentially but up 11.9% year over year), respectively. Operating Results Gross margin was 54.5%, up 158 basis points (bps) sequentially and down 433 bps year over year due to an unfavorable product mix in the Fitness segment. Operating expenses of $236 million were up 1.6% from $232.4 million in the year-ago quarter. Operating margin of 16.6% was down 245 bps year over year due to lower gross margin and higher R&D and advertising expenses. GAAP net income was $88.1 million or 46 cents per share compared with $66.8 million or 35 cents per share a year ago. On a pro-forma basis excluding foreign currency effects net of tax, Garmin reported net income of $92.1 million compared with the year-ago tally of $104.9 million. There were no one-time adjustments in the quarter. Balance Sheet Inventories were up 3.4% sequentially to $517.8 million. Cash and marketable securities were approximately $1.06 billion compared with $2.4 billion in the previous quarter. The company has no long-term debt. The company generated cash flow of $129.4 million from operating activities. Moreover, in the reported quarter, Garmin spent about $96.6 million on dividends and $19.8 million on share repurchases. The company has $149 million remaining under the share repurchase program authorized through Dec 31, 2016, and expects to repurchase as conditions warrant. Guidance The company has reiterated its 2016 guidance issued in February. At that time management introduced target revenues of $2.82 billion, gross margin of around 54.5%, operating margin of roughly 18.0%; pro-forma tax rate of nearly 20.5% and pro-forma earnings of $2.25 per share. Currently, the Zacks Consensus Estimate for revenues and earnings stands at $2.809 billion and $2.25 per share, respectively. The company announced its plan to seek shareholders’ approval at the annual meeting to be held on June 10, 2016 for a dividend of $2.04 per share payable in four installments of 51 cents per share each quarter. Conclusion Garmin reported strong first-quarter results with both earnings and revenues surpassing the Zacks Consensus Estimate. Acquisition and product line expansion are top priorities of Garmin. In the quarter, the company acquired DeLorme, the provider of the inReach series of affordable two-way satellite communication devices for consumers. This helped in adding device and recurring service revenue to the outdoor segment. Garmin also started shipments of activity tracker vívoactive HR with Garmin Elevate wrist heart rate technology and the vívofit 3 with one year battery life, announced recently. Management focuses on continued innovation to deliver compelling products across served markets. However, the macroeconomic challenges faced in 2015 remain part of the operating environment. Garmin currently has a Zacks Rank #3 (Hold). Investors may also consider stocks like Siemens Aktiengesellschaft SIEGY, Mistras Group, Inc. MG and Facebook, Inc. FB. While Mistras sports a Zacks Rank #1( (Strong Buy), Siemens and Facebook holds a Zacks Rank #2 (Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GARMIN LTD (GRMN): Free Stock Analysis Report MISTRAS GROUP (MG): Free Stock Analysis Report SIEMENS AG-ADR (SIEGY): Free Stock Analysis Report FACEBOOK INC-A (FB): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research