Garmin announces third quarter 2024 results
Company reports record third quarter consolidated revenue and operating income, and raises full year guidance
SCHAFFHAUSEN, Switzerland, Oct. 30, 2024 /PRNewswire/ -- Garmin® Ltd. (NYSE:GRMN), today announced results for the third quarter ended September 28, 2024.
Highlights for third quarter 2024 include:
Consolidated revenue of $1.59 billion, a 24% increase compared to the prior year quarter
Gross and operating margins expanded to 60.0% and 27.6%, respectively
Operating income of $437 million, a 62% increase compared to the prior year quarter
GAAP EPS of $2.07 and pro forma EPS(1) of $1.99, representing 41% growth in pro forma EPS over the prior year quarter
Launched the fēnix® 8 series and the EnduroTM 3, expanding our lineup of outdoor adventure watches
Named 2024 Manufacturer of the Year by the National Marine Electronics Association for the 10th consecutive year, and received six Product of Excellence awards, for a total of 63 over the last decade
Named the #1 Most Innovative Marine Company for the second consecutive year by Soundings Trade Only, a leading trade publication for the recreational boating industry
Announced the strategic acquisition of Lumishore, a leader in marine LED lighting
Co-founders, Dr. Min Kao and the late Gary Burrell, were enshrined in the National Aviation Hall of Fame
(In thousands, except per share information)
13-Weeks Ended
39-Weeks Ended
September 28,
September 30,
YoY
September 28,
September 30,
YoY
2024
2023
Change
2024
2023
Change
Net sales
$
1,586,022
$
1,277,531
24 %
$
4,474,342
$
3,745,751
19 %
Fitness
463,887
352,976
31 %
1,235,182
932,561
32 %
Outdoor
526,551
433,997
21 %
1,332,617
1,210,773
10 %
Aviation
204,631
198,160
3 %
639,739
629,195
2 %
Marine
222,244
182,248
22 %
821,933
677,026
21 %
Auto OEM
168,709
110,150
53 %
444,871
296,196
50 %
Gross margin %
60.0
%
57.0
%
58.5
%
57.2
%
Operating income %
27.6
%
21.2
%
24.1
%
20.1
%
GAAP diluted EPS
$
2.07
$
1.34
54 %
$
5.06
$
3.90
30 %
Pro forma diluted EPS(1)
$
1.99
$
1.41
41 %
$
4.99
$
3.88
29 %
(1) See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including pro forma diluted EPS
Executive Overview from Cliff Pemble, President and Chief Executive Officer:
"We delivered another quarter of impressive financial results as our highly differentiated and innovative products resonate with customers, and we successfully leveraged growth opportunities across market segments and geographies. We are raising our 2024 outlook based on the results we have achieved so far and the momentum we are experiencing as we enter the important holiday selling season." - Cliff Pemble, President and Chief Executive Officer of Garmin Ltd.
Fitness:
Revenue from the fitness segment increased 31% in the third quarter with growth across all categories led by strong demand for wearables. Gross and operating margins were 61% and 32%, respectively, resulting in $148 million of operating income. During the quarter, we hosted our annual Garmin Health Summit to recognize innovative digital health solutions utilizing Garmin products, and to celebrate the 10th anniversary of Garmin Health. Also, during the quarter we announced updates to Garmin Coach, adding training plans for cyclists in addition to the existing training plans for runners, making it easier to prepare for an event, pursue a personal milestone or improve overall fitness.
Outdoor:
Revenue from the outdoor segment increased 21% in the third quarter primarily due to growth in adventure watches. Gross and operating margins were 68% and 40%, respectively, resulting in $209 million of operating income. During the quarter, we launched both the highly anticipated fēnix 8 series, adding brilliant AMOLED displays, cutting edge features, a built-in speaker, microphone, and an LED flashlight, and the Enduro 3, a lightweight ultraperformance GPS smartwatch purpose-built for ultra-endurance athletes with up to 320 hours of battery life in GPS mode with solar charging. We also launched the inReach® Messenger Plus, our first satellite communicator with photo and voice messaging in addition to two-way texting, location sharing and SOS capabilities, expanding our customers' ability to stay in touch beyond cell service.
Aviation:
Revenue from the aviation segment increased 3% in the third quarter with growth driven by aftermarket product categories. Gross and operating margins were 75% and 22%, respectively, resulting in $44 million of operating income. During the quarter, we announced Runway Occupancy Awareness, which uses ADS-B information to help reduce the risk of runway incursions and provide added confidence to pilots navigating busy and complex airports. Garmin is the first to bring this new safety feature to market. We also recently unveiled our new G3000® PRIME, which redefines the integrated flight deck experience with sleek, intuitive, all-touchscreen displays and a highly flexible open architecture system that seamlessly adapts to serve a broad and dynamic market.
Marine:
Revenue from the marine segment increased 22% in the third quarter primarily driven by the acquisition of JL Audio®. Gross and operating margins were 55% and 17%, respectively, resulting in $38 million of operating income. During the quarter, we announced several new products to enhance our customers' time on the water, including Fusion ApolloTM marine speaker and subwoofer series, the GCTM 245/55 marine cameras, and the GPSMAP® 9500 black box system. We recently announced the acquisition of Lumishore, a leader in marine LED lighting as we continue to focus on providing seamless integration throughout the boat.
Auto OEM:
Revenue from the auto OEM segment increased 53% during the third quarter primarily driven by growth in domain controllers. Gross margin was 20% and the operating loss narrowed to $1 million as efficiencies improved with higher sales volumes. During the quarter, we successfully launched the Garmin-designed domain controllers across all remaining BMW Group car lines.
Additional Financial Information:
Total operating expenses in the third quarter were $514 million, a 12% increase over the prior year. Both research and development and selling, general and administrative expenses increased 12% driven primarily by personnel related costs.
The effective tax rate in the third quarter was 17.9% compared to the effective tax rate of 8.0% and the pro forma effective tax rate(1) of 7.2% in the prior year quarter. The increase in the current quarter effective tax rate is primarily due to the increase in the combined federal and cantonal Switzerland statutory tax rate in response to global minimum tax requirements.
In the third quarter of 2024, we generated operating cash flows of $258 million and free cash flow(1) of $219 million. We paid a quarterly dividend of approximately $144 million and repurchased $20 million of the Company's shares within the quarter, leaving approximately $270 million remaining as of September 28, 2024 in the share repurchase program authorized through December 2026. We ended the quarter with cash and marketable securities of approximately $3.5 billion.
(1)
See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including pro forma effective tax rate and free cash flow.
2024 Fiscal Year Guidance:
Based on our performance in the first three quarters of 2024, we are adjusting our full year guidance. We now anticipate revenue of approximately $6.12 billion and pro forma EPS of $6.85 based on gross margin of 58.5%, operating margin of 24.0% and a full year effective tax rate of 16.5% (see attached discussion on Forward-looking Financial Measures).
Dividend Recommendation:
The board of directors has established December 27, 2024, as the payment date for the next dividend installment of $0.75 per share with a record date of December 13, 2024. At the 2024 annual shareholders' meeting, Garmin shareholders, in accordance with Swiss corporate law, approved a cash dividend in the total amount of $3.00 per share, payable in four equal installments on dates to be determined by the board in its discretion. The first and second payments were made on June 28, 2024 and September 27, 2024. The board currently anticipates the scheduling of the remaining quarterly dividend installments as follows:
Dividend Date
Record Date
$s per share
March 28, 2025
March 14, 2025
$0.75
Webcast Information/Forward-Looking Statements:
The information for Garmin Ltd.'s earnings call is as follows:
When:
Wednesday, October 30, 2024 10:30 a.m. Eastern
Where:
Join a live stream of the call at the following link
https://www.garmin.com/en-US/investors/events/
An archive of the live webcast will be available until October 29, 2025 on the Garmin website at www.garmin.com. To access the replay, click on the Investors link and click over to the Events Calendar page.
This release includes projections and other forward-looking statements regarding Garmin Ltd. and its business that are commonly identified by words such as "anticipates," "would," "may," "expects," "estimates," "plans," "intends," "projects," and other words or phrases with similar meanings. Any statements regarding the Company's expected fiscal 2024 GAAP and pro forma estimated earnings, EPS, and effective tax rate, and the Company's expected segment revenue growth rates, consolidated revenue, gross margins, operating margins, potential future acquisitions, share repurchase programs, currency movements, expenses, pricing, new product launches, market reach, statements relating to possible future dividends, and the Company's plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of risk factors and uncertainties affecting Garmin, including, but not limited to, the risk factors that are described in the Annual Report on Form 10-K for the year ended December 30, 2023 filed by Garmin with the Securities and Exchange Commission (Commission file number 001-41118). A copy of Garmin's 2023 Form 10-K can be downloaded from https://www.garmin.com/en-US/investors/sec/. All information provided in this release and in the attachments is as of September 28, 2024. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.
This release and the attachments contain non-GAAP financial measures. A reconciliation to the nearest GAAP measure and a discussion of the Company's use of these measures are included in the attachments.
Garmin, the Garmin logo, the Garmin delta, fēnix, G3000, GPSMAP, inReach, and JL Audio are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Enduro, Fusion Apollo, and GC are trademarks of Garmin Ltd. or its subsidiaries. All other brands, product names, company names, trademarks and service marks are the properties of their respective owners. All rights reserved.
Investor Relations Contact:
Media Relations Contact:
Teri Seck
Krista Klaus
913/397-8200
913/397-8200
Change in Operating Expense Presentation
Certain prior period information presented here has been recast to conform to the current period presentation. In the first quarter of 2024, the Company changed the presentation of operating expense to include advertising expense within selling, general, and administrative expenses on the Company's condensed consolidated statements of income, which management believes to be a more meaningful presentation. This change in presentation had no effect on the Company's consolidated operating or net income.
Garmin Ltd. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
13-Weeks Ended
39-Weeks Ended
September 28,
September 30,
September 28,
September 30,
2024
2023
2024
2023
Net sales
$
1,586,022
$
1,277,531
$
4,474,342
$
3,745,751
Cost of goods sold
634,423
548,962
1,857,712
1,604,945
Gross profit
951,599
728,569
2,616,630
2,140,806
Research and development expense
249,162
221,572
734,848
667,451
Selling, general and administrative expenses
264,962
236,628
803,869
721,649
Total operating expense
514,124
458,200
1,538,717
1,389,100
Operating income
437,475
270,369
1,077,913
751,706
Other income (expense):
Interest income
28,830
19,803
83,143
54,461
Foreign currency gains (losses)
18,131
(11,539)
15,584
6,946
Other income
1,814
938
2,623
4,206
Total other income (expense)
48,775
9,202
101,350
65,613
Income before income taxes
486,250
279,571
1,179,263
817,319
Income tax provision
87,139
22,328
203,560
69,810
Net ...
