Garmin reports 2Q results

Garmin Ltd. reported second-quarter revenue of $817 million.
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Garmin Ltd. reported second-quarter revenue of $817 million, up 1 percent from the same period last year.

The company said outdoor, aviation, marine and fitness collectively grew 8 percent from the prior-year quarter and contributed 74 percent of total revenue.

Switzerland-based Garmin reported net income of $171 million, or 91 cents a diluted share, for the quarter that ended July 1, up from $161 million, or 85 cents a share, a year earlier.

On a pro-forma basis the company said it earned 88 cents a share, which beat analysts' average estimate of 81 cents.

Gross margin improved to 58.5 percent, compared with 57 percent in the year-earlier quarter, and operating margin improved to 24.9 percent, compared with 24.7 percent in 2016.

Operating income was $203 million, growing 1 percent from last year’s quarter.

“We delivered another quarter of revenue and earnings growth, led by strong double‐digit growth in our outdoor and aviation segments,” Garmin president and CEO Cliff Pemble said in a statement.

“The demand for advanced wearables was particularly strong, but was partially offset by negative trends in the activity tracker market. Our results thus far give us confidence in raising our outlook for the remainder of the year.”

Revenue in the marine segment declined 3 percent during the quarter, with gross and operating margins of 57 percent and 22 percent, respectively. For the first half of the year, the company said it delivered 10 percent revenue growth and 9 percent operating income growth and says it remains confident in its outlook for the year.

During the second quarter Garmin announced the acquisition of Active Corp., a developer of crowdsourced content for boaters. The company also launched its latest marine wearable, the quatix 5, adding autopilot control and the ability to mark remote multifunction display waypoints.

“Looking forward, we are focused on product innovations and gaining share in the inland fishing category,” the company said.

Based on the first-half results, Garmin raised its guidance.

“We now anticipate revenue of approximately $3.04 billion, driven primarily by higher expectations for our outdoor and aviation segments, partially offset by lower expectations for the fitness segment,” the company said.

Its outlook for marine and auto is unchanged.

“We anticipate our full-year pro-forma EPS will be approximately $2.80, based on an improved gross margin of about 57.5 percent, operating margin of about 21 percent and a full-year pro-forma effective tax rate of about 22 percent,” the company said.

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