Garmin Clocks 7% Revenue Growth In Q3, Cuts FY21 Gross Margin Outlook

Garmin Ltd GRMN reported third-quarter FY21 revenue growth of 7% year-on-year to $1.19 billion, beating the consensus of $1.15 billion.
Revenue from Fitness rose 4% Y/Y to $342.3 million, Outdoor declined 3% Y/Y to $323.9 million, Aviation improved 19% Y/Y to $180.2 million, Marine jumped 25% Y/Y to $207.5 million, and Auto sales grew 7% Y/Y to $138.1 million.
Margins: The gross margin contracted 180 basis points to 58.4%, while the operating margin contracted 490 basis points to 23.7%.
Pro forma EPS of $1.41 beat the consensus of $1.26.
Net cash provided by operating activities totaled $245.4 million with $204 million in free cash flow. It held $3.2 billion in cash and equivalents. The company paid dividends worth $129 million.
"Strong demand for active lifestyle products continued, and our marine and aviation segments recorded impressive double-digit growth resulting in record consolidated revenue in the third quarter," CEO Cliff Pemble said.
Outlook: Garmin raised the FY21 revenue guidance from $4.9 billion to $4.95 billion, below the consensus of $4.98 billion.
It also increased the non-GAAP EPS guidance from $5.50 to $5.60, below the consensus of $5.62.
Garmin reduced the gross margin outlook from 58.5% to 58.2% and raised the operating margin from 23.8% to 24%
Price Action: GRMN shares traded lower by 1.25% at $158.3 in the premarket session on the last check Wednesday.

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