Garmin [GRMN] Conference call transcript for 2023 q4
2024-02-21 14:36:06
Fiscal: 2023 q4
Operator: Good morning, and welcome to the Garmin Limited Fourth Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks we'll have a question-and-answer session. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the call over to Teri Seck, Director of Investor Relations. Thank you. Please go ahead.
Teri Seck: Good morning. We would like to welcome you to Garmin Limited's fourth quarter 2023 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/stock. 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, revenue segment growth rate, earnings gross margins, operating margins, future dividends or share repurchases, market shares, product introduction, 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 Boessen, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pemble.
Clifton Pemble: Thank you, Teri, and good morning, everyone. As announced earlier today, Garmin delivered outstanding results in the fourth quarter with strong growth in consolidated revenue and profit. Consolidated revenue increased 13% to nearly $1.5 billion, representing a new fourth quarter record with three business segments delivering double-digit growth. Gross and operating margins expanded year-over-year to 58% and 23%, respectively, resulting in operating income of $340 million, up 27% for the year. This resulted in pro forma EPS of $1.72, up 27% over the prior year. We entered 2023 cautiously optimistic, but as the year continued, we experienced better than expected momentum in multiple segments, which resulted in a record breaking year. Consolidated revenue increased 8% to $5.2 billion, which is a new annual record. Operating income increased 6% to nearly $1.1 billion and operating margin came in at 21%. During the year, component lead times and availability continued to normalize, while shipping bottlenecks eased. These factors, combined with healthy demand for our products, reduced inventory levels and boosted free cash flow to nearly $1.2 billion. We believe current inventory levels are appropriate and expect inventory will grow from this point forward at a rate that is roughly in line with sales. Looking forward, we have a robust lineup of recently introduced products and additional product launches are planned throughout the year. We anticipate 2024 consolidated revenue will increase approximately 10% to $5.75 billion. Our results and outlook for the year give us the confidence to propose an annual dividend of $3 per share, an $0.08 increase over the prior dividend amount, which will be considered by shareholders at the upcoming annual meeting. In addition, our Board of Directors recently approved a $300 million share repurchase program over the next three years. Before moving on to the performance and outlook for each business segment, I want to mention the recognition we received recently from Forbes who ranked Garmin number two on their list of best large employers in America. We're honored to be recognized for creating a best-in-class workplace. Garmin associates are passionate about what we do and we share a deep commitment to serving customers and each other. Moving next to segment highlights. Fitness revenue increased 21% for the year with growth across all product categories, led by strong demand for our new running watches. Full-year growth in operating margins were 53% and 17%, respectively, and operating income more than doubled to $232 million. At the recent Consumer Electronics Show, the Venu 3 was recognized with three awards including best of innovation for outstanding engineering. With its rich wellness and fitness features, bright display and long battery life, the Venu 3 is indeed a best-in-class product. Looking ahead, we have a strong lineup of recently introduced running, cycling, and wellness products and expect to launch additional products during the year to support growth. With this in mind, we expect fitness revenue will increase approximately 7% for the year. Moving to Outdoor. Revenue decreased 4% for the year as solid performance in the second half of the year could not fully offset the weaker first half. Full-year gross and operating margins were 63% and 30%, respectively, resulting in operating income of $515 million. During the fourth quarter, we expanded our lineup of underwater diving products with the introduction of the Descent G1 Solar Ocean Edition, our first-ever product made with recycled ocean-bound plastics. We also launched the new Descent Mk3 dive watch and the Descent T2 transceiver with enhanced SubWave communication technology that enables diver-to-diver messaging and tank pressure monitoring on the wrist. For over two decades, our eTrex series of handhelds have been an essential product for outdoor adventures. We recently launched the eTrex Solar, our first handheld GPS with solar charging technology. This new handheld can operate indefinitely using only the power harvested from the sun, which is a game changer for hikers, explorers and off-the-grid adventurers. Looking ahead, we expect that our strong outdoor product road map will result in revenue growth of 7% for the year. Looking next at Aviation. Revenue increased 7% for the year to $846 million, a new record driven by growth in OEM product categories. Full-year gross and operating margins were 74% and 27%, respectively, resulting in operating income of $226 million, up 6% over the prior year. During the quarter, our G3000 integrated flight deck was selected by Embraer backed Eve Air Mobility for its electric vertical takeoff and landing aircraft. Eve Air Mobility joins a growing list of advanced air mobility companies who have selected our state-of-the-art cockpit systems. More recently, Garmin was ranked number one for the 20th consecutive year in Professional Pilot's 2024 Avionics Manufacturers Product Support Survey. This accomplishment is the direct result of the strong commitment and hard work of our aviation team and the investments we have made in this business. In recent years, the aviation segment has experienced growth in OEM equipment categories driven by an increased interest in private air travel. We expect this trend to continue in 2024 as aircraft makers work through historically high back orders. On the other hand, we expect softer aftermarket sales in the coming year. With these things in mind, we expect aviation revenue to be approximately flat to the prior year. Turning next to the Marine segment. Revenue increased 1% to $917 million, a new record and included approximately $42 million of revenue from the recently acquired JL Audio business. Excluding JL Audio, revenue from marine decreased approximately 3% for the year. The marine market has slowed in 2023 with many players reporting double-digit revenue declines, but we outperformed by capturing market share from our competitors. Full-year gross and operating margins were 54% and 20%, respectively, resulting in operating income of $179 million. During the fourth quarter, we launched the ECHOMAP Ultra 2 chartplotter series designed with premium sonar, mapping and wireless networking capability. We also launched the GSD 28 sonar with rapid return technology for higher resolution imaging in deepwater. These innovations demonstrate why our marine segment is performing so well in an otherwise soft market. Looking forward, we expect marine revenue will increase approximately 10% for the year, with growth driven by JL Audio, which is expected to be about 15% of total marine sales. Moving finally to the auto OEM segment. Revenue increased 49% to $423 million, a new record with growth primarily driven by increased shipments of domain controllers to BMW. Full-year 2023 gross margin was 23% and our losses narrowed progressively throughout the year, ending at just under $10 million for the fourth quarter. Many are wondering what lies beyond the BMW programs that are currently fueling our growth. I'm pleased to report that during 2023, we were awarded a new multi-year contract with another premium automaker to supply domain controllers on a global basis starting in 2027. This is projected to be the single largest award in the history of our auto OEM business, expanding our market share and customer base for domain controllers. We're also winning new business in other categories. We recently announced our motorcycle entertainment solution was selected by Yamaha Motors for certain motorcycles and smart scooters. This award adds to the already strong business we have with Yamaha across both two-wheel and marine vehicles. I'm proud of the progress our auto OEM team has made in 2023. Looking ahead, we expect revenue to increase approximately 50% as deliveries of domain controllers continue to ramp up, and we expect to reach profitability on a quarterly basis in the back half of the year. That concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug?
Douglas Boessen: Thanks, Cliff. Good morning, everyone. I'd like to begin by reviewing our fourth quarter and full-year financial results, provide comments on the balance sheet, cash flow statement, taxes, and 2024 guidance. We posted revenue of $1.483 billion for the fourth quarter, representing a 13% increase year-over-year. Gross margin was 58.3%, increased 130 basis points for the prior year quarter, primarily due to lower freight costs. Operating expense as a percent of sales was 35.3%, 120 basis point decrease. Operating income was $340 million, 27% year-over-year increase. Operating margin was 23%, 250 basis point increase from the prior year. Our GAAP EPS was $2.82. Pro forma EPS was $1.72, 27% increase in prior year pro forma EPS. Looking at the full-year results, we posted revenue of $5.228 billion, representing an 8% increase year-over-year. Gross margin was 57.5%, a 20 basis point decrease from the prior year. Operating expense as a percentage of sales was 36.6% comparable to the prior year. Operating income was $1.92 billion, 6% increase. Operating margin was 20.9%, 20 basis point decrease from the prior year. Our GAAP EPS was $6.71, pro forma EPS was $5.59, 9% increase from the prior year pro forma EPS. Next, we look at our fourth quarter revenue by segment and geography. During the fourth quarter, we achieved record consolidated revenue and double-digit growth in three of our five segments. By geography, Americas, EMEA regions achieved double-digit growth of 13% and 19%, respectively while the APAC region achieved growth of 4%. For the full-year 2023, we achieved 8% consolidated growth with record revenue in three of our five segments. By geography, we achieved 8% growth in Americas, 9% growth in EMEA and 5% growth in APAC. Looking next, operating expenses. Fourth quarter operating expenses increased by $46 million or 10%. Research and development increased approximately $22 million year-over-year, primarily due to engineering personnel costs. SG&A increased approximately $21 million compared to the prior year quarter, primarily due to increase in personnel-related expenses in addition of the JL Audio business. Advertising expense increased approximately $4 million, primarily due to higher co-op advertising. A few highlights on the balance sheet, cash flow statement, dividends and share repurchase. We ended the quarter with cash and marketable securities of approximately $3.1 billion. Accounts receivable increased sequentially and year-over-year to $815 million due to seasonally strong sales in the fourth quarter. Inventory balance decreased year-over-year to $1.3 billion to execute our strategy to optimize inventory, reductions in our consumer inventory more than offsetting the increases associated with our auto OEM business, the addition of JL Audio inventory. During the fourth quarter of 2023, we generated free cash flow of $470 million, $108 million increase from the prior year quarter primarily due to a lower use of cash purchases of inventory. For the full-year 2023, we generated free cash flow of $1.183 billion, $639 million increase from the prior year, which was primarily due to a lower use of cash purchase of inventory, which we do not expect to repeat in 2024. 2023, our capital expenditures were $194 million, a $51 million decrease compared to the prior year. In 2024, we expect free cash flow to be approximately $750 million, approximately $375 million of capital expenditures. In 2024, we expect to continue to make investments in platforms for growth, clean facilities, and IT-related projects. In 2023, we paid dividends of approximately $559 million. Also, we announced our plan to seek shareholder approval for an increase in our annual dividend beginning with the June 2024 payment. Proposal is a cash dividend of $3 or $0.75 per share per quarter, which is a 3% increase from our current quarterly dividend of $0.73 per share. In 2023, we used $99 million of cash through purchase company shares, completing the previous $300 million share repurchase program. Our Board of Directors recently approved a $300 million share repurchase program, which is authorized through December 2026. Our full-year 2023 pro forma effective tax rate was 8.5% compared to 7.9% in the prior year. Fiscal 2024 pro forma effective tax rate is expected to be 15.5%, a 700 basis point increase over the prior year. Expected year-over-year increase in the 2024 pro forma tax rate is primarily due to increases in the combined Switzerland tax rates, impact of implementation of global minimum tax requirements. Turning next to our full-year guidance. We estimate revenue of approximately $5.75 billion, an increase of approximately 10% over the prior year. We expect gross margin to be approximately 56.5%, 100 basis point year-over-year decrease, which is primarily due to segment mix as auto OEM becomes a large percentage of our business. We expect an operating margin of approximately 20% and the full-year pro forma effective tax rate is expected to be approximately 15.5%. This results in expected pro forma earnings per share of approximately $5.40. This concludes our formal remarks. Julianne, can you please open the line for Q&A?
Operator: Thank you. [Operator Instructions]. Our first question will come from Joseph Cardoso from JPMorgan. Please go ahead. Your line is open.
Joseph Cardoso: Hi, good morning, and thanks for the question. First question here is just on the auto OEM business. I guess it's a two-parter. First, can you just expand, obviously, auto OEM revenue expanded $150 million in '23. You're targeting to expand another $200 million in '24. As you think about your target for $800 million by '25, how are you thinking about your ability to overachieve on it given the current trajectory that you're on? And then in a similar vein, with another year of ramping this business under your belt, how are you thinking about that margin profile as we approach this level of $800 million of revenue now, particularly, is there any implications we should think of from the new customer win that you'll eventually on board? Thanks. And then I have a follow-up.
Clifton Pemble: Thanks. Good morning. So on the first part of the question in terms of our ability to overachieve, what we've mentioned as a peak of about $800 million in 2025. I would say that we don't project that far out in terms of ability to under or overachieve. We're going by input from the manufacturers who provide us with their longer-term forecast, but those can go up and down as production dates near. So I think, in general, those are just reference points for people to consider. In terms of the margin profile, we've been telling people that the margin in auto OEM is expected to go down as it has been doing. We do expect to be in that 20 -- mid-20% kind of range for the segment. That's our target, but it's based on a mix of very high volume, lower margin products as well as some lower volume, higher-margin products that are only speculative.
Joseph Cardoso: I got it. I guess just a follow-up there, and I'll use this as my second question. Just in terms of the new win that you're onboarding though, can you just talk about how you're thinking about the elevated costs that you need to ramp that new customer? Or are you not assuming that you'll need to onboard increased expenses there? I guess that's kind of what I was getting at in terms of the margin profile on the auto OEM business as you kind of think about bringing in that new customer. Like how are you thinking about the implications or headwinds to margins as you start to ramp with that new customer? Thank you.
Clifton Pemble: So the most significant new win that we mentioned with the global automaker is a program that does not require a significant amount of R&D investment. So as a result, it will be lower intensity in terms of the investment that we will make in that to bring that customer on board.
Joseph Cardoso: Got it. Very clear, Cliff. Thank you.
Clifton Pemble: Thank you.
Operator: Our next question comes from George Wang from Barclays. Please go ahead. Your line is open.
George Wang: Hey guys. Congrats on the quarter. Just two quick ones. Firstly, just in terms of the capital return, nice to see additional $300 million of share authorization. Just curious kind of any additional color you can share in terms of the cadence. Do you guys plan to front-load some of the buyback near term or kind of more evenly spread? So just kind of try to get any possible additional color, so beyond this kind of over three years?
Douglas Boessen: Yes. Thanks, George. Yes, we just completed our previous $300 million authorization and the Board authorized an additional $300 million over the next three years. So that cadence of acquisitions will be just based upon the market conditions, business conditions at that point in time.
George Wang: Okay, great. Just a kind of follow-up in terms of the business. It's nice to see revenue kind of approaching 10% growth year-over-year, obviously partially aided by the auto OEM business. So my question is really kind of as you project for FY '24 by segment versus three months back, any major sort of incremental data point you kind of want to share from any of the segments, whether it's the fitness or the outdoor? Just curious if anything has changed to curate over the last three months?
Clifton Pemble: Yes, George, I think we did demonstrate some good momentum in Q4 and really in the back half of all of 2023 in both outdoor and fitness. So as a result, we've become incrementally more positive on those two, especially considering our current product lineup and the roadmap of products that we have out in front of us.
George Wang: Okay, great. Thanks for the color. I'll go back to the queue.
Operator: Our next question comes from David MacGregor from Longbow Research. Please go ahead. Your line is open.
David MacGregor: Good morning everyone. Great quarter. Congratulations. I wanted to just start off by asking you for your impressions on kind of the fourth quarter holiday sales season. What you were seeing from the consumer, what patterns you were noticing, how people were responding to different price points. I mean any color you can provide on the state of the consumer and what you took away from kind of the fourth quarter?
Clifton Pemble: I would say generally that the response from the consumer side was better than we expected and actually seem quite strong. Our sell-through appeared to be very, very good and of course, drove incremental production that we did in the third and fourth quarter to supply/demand.
David MacGregor: And any kind of competitive dimension here we could color in for us?
Clifton Pemble: Well, I -- probably not a lot to say other than the remarks we made, particularly in marine, where we're taking some market share. It is probably also true that we're taking market share in wearables as well. But our product lines and our position in the market is much different because of the unique nature of all the products that we have in that market.
David MacGregor: Yes. And you're not seeing any mix down or any dynamic like that?
Clifton Pemble: Actually, I would say that the response to our higher-end products in the recent quarter or two, the back half of 2023 has been very good.
David MacGregor: Okay. As a follow-up, I just wanted to ask on the automotive business. You noted that you expect the business to turn profitable in the second half. How are you thinking about an end of your exit run rate on segment margins?
Clifton Pemble: Well, we've guided people to think about gross margins in the range of mid- to upper teens and operating margins in the mid-single-digits.
David MacGregor: That's for the full-year, right?
Clifton Pemble: No. That's really on a run rate basis. I think for the full-year, we mentioned in the remarks that we expect to exit the back half profitable on a quarterly basis. We don't expect 2024 to be profitable as a full-year but then we'll work into 2025 on that basis.
David MacGregor: Got it. Thanks very much. Good luck.
Operator: Our next question comes from Jordan Lyonnais from Bank of America. Please go ahead. Your line is open.
Jordan Lyonnais: Good morning. Thanks for taking the time. Would you guys be able to give more color on what drove the lower revenue in aviation aftermarket?
Clifton Pemble: Yes. I think aviation aftermarket, Jordan is an interesting market because it's a very narrow distribution channel through specialty installers, doesn't have the same kind of retail dynamic. And we did come off of 2022 and into 2023, with significant supply chain challenges, which drove behaviors on the part of those dealers and installers to have more inventory on their shelves. During 2023, we saw them essentially burning that off as they had installs come in, and they were working on aircraft. And we expect some of that to continue also in 2024.
Jordan Lyonnais: Got it, thank you so much.
Clifton Pemble: Thank you.
Operator: Our next question comes from Erik Woodring from Morgan Stanley. Please go ahead. Your line is open.
Erik Woodring: Awesome. Thank you very much for taking my questions guys and good morning. Maybe my first question for you, Cliff, is a bit of like a philosophical question, which is if we look back historically at kind of the Garmin story, it was always about kind of premiumization. Obviously, amazing gross margins that generally have trended higher over time. Your strongest growing segment is now also going to be your largest -- sorry, your lowest gross margin segment. So how should we think about the -- what the model really is now? Is it more about maximizing operating profit dollars as opposed to margins? Can you just help us think through how that change is taking place now that you have this really kind of exploding auto OEM opportunity? And then I have a follow-up. Thank you.
Clifton Pemble: Yes. I would say, Erik, that there's probably no one mold to put Garmin in when it comes to the breadth and depth of our businesses. We still and always will serve those premium niche markets in our traditional markets. And we see new opportunities like auto OEM as a way to leverage the strength we have in vertical integration, our smart factories, our supply chain capability and our ability to serve customers, which has been very attractive. So at the end of the day, it's profit dollars that we can put in the bank. And going about doing that, we simply try to play to all the strengths that we have.
Erik Woodring: Okay. Okay. That's really helpful. And then maybe the second question is over the last few years, we've seen a bit of a deviation or gap, somewhat unusually between the outdoor and fitness businesses, somewhat kind of reflective of kind of key product launches. For 2024, obviously, you've kind of guided those businesses back to tracking in line with one another. So just maybe my question is when we think about maybe the product launch cadence and the importance of those product launches, should we think about this being a bit more evenly split across both of those product lines as opposed to maybe focusing on one or the other? Is that the right way of thinking kind of your emphasis on product launches for the entirety of 2024 just in these two segments specifically?
Clifton Pemble: Well, I would say that ideally, we would want to have a very even cadence between those two segments when it comes to product launches. It doesn't always work out that way just because of the nature of product development and the complexity of the various product lines that we take on. I would expect in 2024 that outdoor will be more active than fitness. But then again, in 2023, fitness was more active than outdoor.
Erik Woodring: Okay. That's really helpful. Thank you very much for the color, Cliff.
Clifton Pemble: Thank you.
Operator: Our next question comes from Noah Zatzkin from KeyBanc Capital Markets. Please go ahead. Your line is open.
Noah Zatzkin: Hi, thanks for taking my questions. Maybe just one on kind of marine for me. Just wondering if you could kind of expand upon how you're thinking about end market dynamics this year? And just any color on your OEM business versus aftermarket and how you're thinking about that dynamic playing out as we look into 2024? Thanks.
Clifton Pemble: Let's say, Noah, that the market, as we mentioned in the remarks is softer. I think in general, I would say that we estimate the market declined about 10% in 2023. When you look at all the various players, we outperformed with market share gains. So we're thrilled with that, and we expect in 2024 that we'll continue to perform ahead of the market. In terms of the dynamic between OEM and aftermarket in marine, the aftermarket is really the bigger slice of the pie, if you will. So we're influenced more by those dynamics. We do expect 2024 will be offset in terms of any softness will be offset by new revenue from JL Audio, which we expect to be about 15% of the segment revenue for the year.
Noah Zatzkin: And then maybe just one in terms of -- I know you're guiding to the pro forma tax rate of 15.5%, but any update on kind of when the tax rate officially changes?
Douglas Boessen: Yes. So yes, we are guiding to a 15.5% for the full-year. So it's really related to the increase in the combined Switzerland tax rates and the impact calculation of a global minimum taxes. So in December of '23, here recently begin a Shop House and actually pass some legislation, which effectively combined or increased the combined Switzerland tax rates to 15%. So that basically affect beginning of the year, 2024.
Noah Zatzkin: Thank you.
Operator: Our next question comes from Ben Bollin from Cleveland Research. Please go ahead. Your line is open.
Benjamin Bollin: Good morning everyone. Thanks for taking the question. Cliff, I'm curious how you think about the contribution of new activations versus refresh across both outdoor and fitness. And then I had a follow-up.
Clifton Pemble: Yes. So new customers to Garmin are still the majority of our registrations that we have on our platforms.
Benjamin Bollin: Is there any differences that you've noticed between outdoor and fitness? Does one seem to be more of a refresh versus the other or it's pretty linear across segments?
Clifton Pemble: No. I mean it does vary by segment and more specifically it varies by product line. Some of our product lines due tend to be driven by existing customers, while others tend to be driven actually by new customers.
Benjamin Bollin: Okay. The last one for me is curious what you're seeing in China and India. Just bigger picture, what's your strategic initiatives there? What are you trying to do? What type of performance have you seen? And that's it for me. Thanks.
Clifton Pemble: Yes, I think in China, the economic situation has been more challenging. I think our performance has been okay. Some countries in Asia do better than others, but in general, I would say it's doing fine given the situation there. We do have a mix of retail partners and our own retail shops in various parts of Asia, including China. So we tend to go a little more direct to customer in some of those countries. In India, we've kind of reset our approach there, and we've got a new distribution partner that's working the market, and we expect to see improvements there. But in general, India is kind of a small market for us right now.
Benjamin Bollin: Thanks.
Operator: Our last question will come from Ivan Feinseth from Tigress Financial Partners. Please go ahead. Your line is open.
Ivan Feinseth: Good morning. Congratulations on the great quarter and year. And thanks for taking my questions. I have a couple of questions. You mentioned gaining market share in smart wearables. There was recently another notable large smart wearable company that had an issue with their pulse ox readings and eventually dropped right now from their product offering. Do you feel -- or did you see that as a major driver of consumer choice to the Garmin watches?
Clifton Pemble: Yes, I don't know that, that was a specific major driver, Ivan. But certainly, we do offer that feature, and we have a feature that's very different from any other player that's out there. But in general, I would say that our products are doing well because they're strong on a broad basis across all kinds of features and the ability to monitor both health and wellness functions as well as strong activity performance as well.
Ivan Feinseth: And then you started to roll out significant upgrades to your Connect app. And what are you still your thoughts on maybe tiering that as far as a premium subscription level?
Clifton Pemble: Well, we continue to look at options for how do we monetize our app base. That's not something that we're eager to plow into because we recognize that a lot of people use our platforms and trust Garmin, especially with the security and the privacy of their data. But there are premium features that we will look at that could possibly result in premium tiers for some of our apps much like we've done for example, in golfing.
Ivan Feinseth: And then two questions on the automotive OEM side. You mentioned that the new customer you're onboarding will not require much R&D. Is that because you're going to get a lot of mileage going forward from the R&D that you've invested so far and that each incremental customer will be more and more profitable?
Clifton Pemble: There's certainly some leveraging of the technologies that we've developed in order to be able to support this kind of customer. But this is actually a build-to-print opportunity. So the design work has been done, and so we're leveraging our factory and our process engineering to bring it into our Garmin factories.
Ivan Feinseth: And then my last question, you mentioned the strong product momentum going into '24. Can you give us some idea of what areas and new products we could expect to see?
Clifton Pemble: Well, we don't mention any of our upcoming releases that aren't already public. But just yesterday, actually, we did announce the Forerunner 165 which I'm super excited about. It's a really strong entry-level watch with a bright OLED display. And I think I have a lot of personal expectations that it will be a popular product.
Ivan Feinseth: All right. Thank you. Congratulations and wishing you a big '24.
Clifton Pemble: Thank you.
Operator: We have no further questions. I would like to turn the call back over to Teri Seck for closing remarks.
Teri Seck: Thank you all for joining us this morning. Doug and I are available for callbacks and we hope you have a great day. Bye.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
