Garmin announces second quarter 2024 results

Company reports record second quarter revenue and raises full year guidance

SCHAFFHAUSEN, Switzerland, July 31, 2024 -- Garmin^® Ltd. (NYSE: GRMN), today announced results for the second quarter ended June 29, 2024.

Highlights for second quarter 2024 include:

• Consolidated revenue of $1.51 billion, a 14% increase compared to the prior year quarter
• Gross and operating margins were 57.3% and 22.7%, respectively
• Operating income of $342 million, a 20% increase compared to the prior year quarter
• GAAP EPS of $1.56 and pro forma EPS⁽¹⁾ of $1.58, representing 9% growth in pro forma EPS over the prior year quarter
• Shipped our one millionth domain controller to Auto OEM customers
• Garmin Health has supported over 1,000 research studies in areas such as sleep, well-being, rehabilitation and physical activity
• Surpassed 20,000 dedicated associates around the globe who are driving our growth and innovation
• Named one of the "Top 10 Best Workplaces for College Grads" on Forbes 2024 America's Best Employers for New Grads
• Recognized as one of the "US News Best Companies to Work For" by US News & World Report

Executive Overview from Cliff Pemble, President and Chief Executive Officer:

"Garmin delivered another impressive quarter of growth in both revenue and operating profit, made possible by an innovative product lineup and the strength of our diversified business model.  We are pleased with our results so far in 2024, which have exceeded our expectations and give us confidence to raise our full year revenue and EPS guidance." - Cliff Pemble, President and Chief Executive Officer of Garmin Ltd.

Fitness:

Revenue from the fitness segment increased 28% in the second quarter primarily driven by growth in wearables. Gross and operating margins were 57% and 25%, respectively, resulting in $108 million of operating income. During the quarter, we launched the Edge^® 1050 premium cycling computer with a vivid color touchscreen display, a built-in speaker for audible feedback, and Garmin Pay contactless payments.  Also during the quarter, we celebrated Global Running Day with Garmin users running nearly 11 million miles, beating last year by more than 2 million miles.

Outdoor:

Revenue from the outdoor segment decreased 2% in the second quarter primarily due to declines in adventure watches. Gross and operating margins were 65% and 31%, respectively, resulting in $136 million of operating income. During the quarter, we launched the Approach^® Z30 smart laser range finder with the Range Relay feature, which sends distance measurements to a compatible Garmin smartwatch or the Garmin Golf^™ smartphone app. We also launched our first cellular based dog tracking collar, Alpha^® LTE. 

Aviation:

Revenue from the aviation segment was relatively flat in the second quarter driven by growth in OEM product categories offset by declines in aftermarket product categories. Gross and operating margins were 74% and 23%, respectively, resulting in $50 million of operating income. For the ninth consecutive year, we were recognized by Embraer as a Best Supplier, most recently in the Electrical & Electrical Systems category for our G3000® Prodigy Touch flight deck systems in the Phenom 100EV and Phenom 300E.

Marine:

Revenue from the marine segment increased 26% in the second quarter primarily driven by the acquisition of JL Audio^®. Gross and operating margins were 54% and 22%, respectively, resulting in $60 million of operating income. We recently expanded the Force^® Kraken trolling motor series, adding a 48-inch shaft length to accommodate a broader range of boats. We also introduced a new Panoptix^™ PS-22 Ice Fishing Bundle, an ultraportable live sonar solution for winter fishing, which won a Best of Category award at ICAST, the world's largest sportfishing trade show. Additionally in the quarter, we were selected as the exclusive marine electronics and audio supplier for Independent Boat Builders, Inc. through 2029.

Auto OEM:

Revenue from the auto OEM segment increased 41% during the second quarter primarily driven by growth in domain controllers. Gross margin was 16% and the operating loss decreased to $12 million. We recently received the, "2024 Global Award for excellence in Technology and Development" from Yamaha Motor, recognized for our motorcycle infotainment solutions.

Additional Financial Information:

Total operating expenses in the second quarter were $521 million, a 10% increase over the prior year. Research and development increased 8% primarily due to engineering personnel costs. Selling, general and administrative expenses increased 11% driven primarily by personnel related costs, including the impact of the acquisition of JL Audio.

The effective tax rate in the second quarter was 17.9% compared to 8.9% in the prior year quarter. The year-over-year increase in the 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 second quarter of 2024, we generated operating cash flows of $255 million and free cash flow⁽¹⁾ of $218 million. We paid a quarterly dividend of approximately $144 million and repurchased $10 million of the Company's shares within the quarter, leaving approximately $290 million remaining as of June 29, 2024 in the share repurchase program authorized through December 2026. We ended the quarter with cash and marketable securities of approximately $3.4 billion.

2024 Fiscal Year Guidance:

Based on our performance in the first half of 2024, we are adjusting our full year guidance. We now anticipate revenue of approximately $5.95 billion and pro forma EPS of $6.00 based on gross margin of 57.0%, operating margin of 21.3% and a full year effective tax rate of 16.0% (see attached discussion on Forward-looking Financial Measures).

Dividend Recommendation:

The board of directors has established September 27, 2024, as the payment date for the next dividend installment of $0.75 per share with a record date of September 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 payment was made on June 28, 2024. The board currently anticipates the scheduling of the remaining quarterly dividend installments as follows:

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.'s earnings call is as follows:

An archive of the live webcast will be available until July 30, 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 June 29, 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, Alpha, Approach, Edge, Force, and JL Audio are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Garmin Golf, and Panoptix 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.