Garmin's Q2 Highlights: 6% Revenue Decline, Fitness Segment Underperformance, FY22 Outlook Cut & More

Garmin's Q2 Highlights: 6% Revenue Decline, Fitness Segment Underperformance, FY22 Outlook Cut & More
  • Garmin Ltd GRMN reported a second-quarter FY22 revenue decline of 6% year-on-year to $1.24 billion, missing the consensus of $1.34 billion.
  • Revenue from Fitness declined 34% Y/Y to $272.1 million, Outdoor rose 18% Y/Y to $381.92 million, Aviation improved 13% Y/Y to $204.74 million, Marine declined 7% Y/Y to $242.79 million, and Auto sales fell 6% Y/Y to $139.29 million.
  • Margins: The gross margin was flattish at 58.7%. The operating margin contracted 440 bps to 23.6% as expenses increased 6.4% Y/Y.
  • Proforma EPS of $1.44 beat the consensus of $1.41.
  • Net cash provided by operating activities totaled $79.8 million, with $4.8 million in free cash flow. It held $2.9 billion in cash and equivalents. 
  • Dividend: The Board established September 30 as the payment date for the next dividend installment of $0.73 per share.
  • "Revenue declined during the second quarter driven primarily by underperformance in our fitness segment," said Cliff Pemble, CEO. "Markets continue to normalize following two years of pandemic driven growth, and we also face additional headwinds including the relentless strengthening of the U.S. Dollar, high inflation, and rising interest rates."
  • Outlook: Garmin cut its FY22 revenue outlook from $5.5 billion to $5 billion, below the consensus of $5.48 billion.
  • Garmin cut proforma EPS from $5.90 to $4.90, below the consensus of $5.95.
  • Price Action: GRMN shares traded lower by 8.21% at $94.09 in the premarket on the last check Wednesday.
  • Photo Via Wikimedia

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