Garmin Turns a Financial Corner

Recent Quarterly performances from Garmin did not inspire confidence. In the previous set of results 3 months ago, the quarter figure for Outdoor (Fenix) showed the first signs of decline and the thought had to be that recession-like conditions in some parts of the world were about to take their toll on Garmin. Not so.

As you can see from the figures at the top of this article, Garmin’s outdoor division has more than reversed the sales losses of the last quarter. There’s still a way to go to get the whole year’s picture back in positive territory but Garmin is well-positioned in North America to take advantage of a strong economy. The previous set of figures showed growth in FITNESS (bike stuff, Forerunner, Venu) and that is continuing with another impressively strong quarter showing 26% sales growth.

Turning to regional sales, I’m not sure what to make of the superficially positive picture. YoY numbers are up but how much of that is simply inflation?

Despite Garmin’s overall corporate sales going up, it’s worth noting that margins have dropped by almost two percentage points. If you want to be negative, that’s the place to look as it comes from an increase in the cost of components although there’s also an FX hit as well.

The super key measure though is cash. And Garmin has increased its cash pile from $1.28bn to $1.42bn. Yikes! (Yikes, is a Wall Street term)

Previous Quarters:

Garmin Outdoor Sales Still Declining – Q2.2023 results are in

Garmin Outdoor Sales – Significant Crash

Detailed notes

Here is what Garmin says about its divisional performances. It’s worth noting that these are forward-looking to a degree. We don’t know to what extent trade sales have been booked into this quarter for the newly announced products that are talked about:

Fitness:
Revenue from the fitness segment grew 26% in the third quarter with growth across all categories led by strong demand for wearables. Gross and operating margins were 54% and 21%, respectively, resulting in $75 million of operating income. During the quarter, we introduced the new Venu 3 smartwatch family in two sizes, as well as the value packed vívoactive 5 with a bright AMOLED display. We also recently announced the expansion of our ECG App to additional smartwatches. This FDA-cleared and clinically-validated app lets even more Garmin customers record an ECG and check for signs of atrial fibrillation right from their smartwatch.
Outdoor:
Revenue from the outdoor segment grew 7% in the third quarter with growth across multiple categories led by adventure watches. Gross and operating margins were 62% and 31%, respectively, resulting in $136 million of operating income. During the quarter, we launched the tactix 7 AMOLED Edition, which expands our offering of wearables with AMOLED displays. This highly versatile smartwatch includes a night vision compatible flashlight and up to 31 days of battery life. We recently announced the MARQ Carbon collection featuring a watch case and bezel inlay machined from a uniquely engineered material called Fused Carbon Fiber—making it distinctive, strong, lightweight, and ready for adventure. [Garmin]

Take Out

Garmin seems to be bucking the recessionary elements in global markets. Nice job all around. I’m pleasantly surprised.