“We were able to deliver solid operating results and consistent pro forma EPS in the first quarter despite the negative impact of a stronger US Dollar compared to other major currencies,” said Cliff Pemble, president and chief executive officer (CEO) of Garmin Ltd. “These results highlight our ability to capitalize on growth opportunities in the near-term while still investing in our market share position and long-term product roadmap through increased advertising and research and development expense. These investments are expected to generate ongoing growth potential in 2015 and future years.”
The fitness segment posted revenue growth of 31% in the quarter with contributions from activity trackers, our recently launched Forerunner® 920XT and our cycling products. Gross margin remained strong at 63% while operating margin declined to 26%, as we continued to invest in advertising and research and development to drive long-term growth opportunities. Additions to the vivo family, including vívofit 2 and vívoactive, began shipping late in the first quarter and we expect them to reach additional retail channels throughout the second quarter as the wearables opportunity continues to expand. In cycling, we recently announced Vector™ 2 and 2S – the latest pedal-based power meters - designed for easy installation and maintenance while delivering the most advanced cycling metrics. Our broad fitness portfolio has never been stronger, offering products for those just beginning their pursuit of an active lifestyle to elite athletes.
The outdoor segment posted a revenue decline of 10% in the quarter, falling short of our expectations. Though revenue declined, gross and operating margins within the segment were strong at 66% and 31%, respectively. While outdoor started slowly in 2015, we do anticipate improvement in the second quarter as we are experiencing robust demand for the fēnix 3 and as we launch additional new products within the segment. In April, we announced the VIRB® X and XE which will begin to ship in the second quarter. The new VIRB action cameras focus on delivering a data-rich experience for the user with embedded sensors capturing speed, altitude, and many other metrics. The G-Metrix™ data is then seamlessly incorporated into the video utilizing our VIRB Edit software, which offers robust features and capabilities in an easy-to-use platform. This hardware and software combination, along with our enhanced mobile application featuring on-the-go mobile video creation, offer a superior user experience that we believe will help us gain momentum in the action camera market and further broaden our revenue base in the outdoor segment.
The aviation segment posted revenue growth of 2% in the first quarter of 2015 following a solid first quarter 2014, when revenue growth was 19% due primarily to new OEM programs. The gross margin in aviation was strong at 73% while operating margin declined to 27% due to growth in research and development to support future revenue opportunities. During the quarter, we continued to enhance our ADS-B offerings and now provide the most comprehensive line of solutions to meet pending modernization deadlines around the world. We believe this will drive improving growth in our aftermarket category. Throughout the remainder of 2015, we will be focused on final certifications with key OEM partners that represent significant market share gains in the business jet and helicopter markets.
The marine segment posted revenue growth of 7% following significant growth of 19% in the first quarter of 2014. We expect growth to accelerate in the second quarter due to a strong backlog for recently introduced products that have proven popular with consumers. Gross margin improved year-over-year to 55% in the quarter with product mix shifting toward new products with less discounting and higher margin profiles. Operating margin also improved in the quarter generating operating income growth of 20%. We remain focused on innovation and product portfolio expansion that will generate market share gains and growing profits throughout 2015.
The auto segment posted a revenue decline of 11% as PND sales continued to decline and the contribution of amortization of previously deferred revenue fell as expected. Gross and operating margins in the quarter were 48% and 10%, respectively. The gross margin improvement over the prior year was primarily due to reduced discounting and lower cost of materials. We recently introduced the nüvicam™, the first PND with a built-in dash cam and advanced alerts including forward collision and lane departure to improve driver awareness. This advanced product highlights the ongoing innovation that we will deliver in both aftermarket and OEM applications.
Additional Financial Information:
Total operating expenses in the quarter were $232 million, a 10%
increase from the prior year. Research and development investment
increased 10% with growth primarily focused on aviation and active
lifestyle products in fitness and outdoor. Advertising increased 13% as
we continued to invest in point-of-sale presence with key retailers,
which will produce long-term revenue results, and prepared for the
launch of a spring wearables advertising campaign. Selling, general and
administrative expense increased by 10% driven largely by legal related