Garmin (GRMN) Looks To Expand Headquarters At Olathe

Worldwide provider of navigation, communications and information devices, Garmin Ltd. (NASDAQ:GRMN) is planning a vast expansion, in terms of building more space and carrying out renovation of its existing facilities, to increase its manufacturing capabilities and thereby propel growth in many areas of its business.

The technology company is looking to expand its headquarters at its Olathe, KS campus, which will cost approximately $200 million. The expansion initiatives are expected to take place in two phases.

Details & Need For Expansion

In the first phase, the company plans to build a new manufacturing and distribution center covering approximately 720,000 square feet area. It also plans to build a new road through its campus. The project is expected to take two years to complete.

Following the completion of the first phase, Garmin plans to renovate its existing warehouse and manufacturing facility, transforming it into a research base, product development hub and office space. The second phase is likely to take an additional two years to finish, with the full project expected to be completed in late 2020.

The expanded headquarters is expected to offer 2.1 million square feet of building space, including a fitness center and cafeteria. Also, it will offer athletic fields and a 2-mile walking trail. Moreover, these expansion initiatives will pave the way for another 2,600 new jobs.

Garmin already enjoys robust demand for all of its products, including products related to the aviation market. This new warehouse and manufacturing facility will significantly expand Garmin’s manufacturing capabilities for its growing aviation business segment.

Therefore, in order to further expand its product offerings and satisfy the ever-growing demands of aircraft manufacturers and aircraft owners, management deems this the best time to extend its existing facilities and provide additional infrastructure.

In the last reported second quarter, Aviation segment revenues were up 1.9% sequentially and 5.9% year over year. The improvement was driven by increase in sales of its Original Equipment Manufacturer (OEM) products and Automatic Dependent Surveillance Broadcast (ADS-B) systems.

Bottom Line

Garmin is one of the leading providers of navigation devices in outdoor/fitness, aviation, marine and automotive markets. A superior portfolio of new products across segments, secular drivers in the aviation market, market share gains in the marine market and contributions from acquisitions are other positives.

It is clear that the company is poised on the right track with regard to its product offerings. The expansion is expected to support Garmin’s growth in terms of operational support and infrastructure.

Zacks Rank

Currently, Garmin sports a Zacks Rank #1 (Strong Buy). Some other well-placed stocks in the same space are Silicon Laboratories Inc. (NASDAQ:SLAB) , sporting a Zacks Rank #1, and Intel Corp. (NASDAQ:INTC) and Inphi Corporation (NYSE:IPHI) , each carrying a Zacks Rank #2 (Buy).