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Key Takeaways Garmin's Q3 EPS of $1.99 beat estimates, while revenues rose 12% year over year to $1.77B.Fitness sales jumped 30%, with Aviation and Marine segments growing 18% and 20%, respectively.GRMN raised 2025 EPS guidance to $8.15, reflecting confidence in continued margin strength.Garmin Ltd. ((GRMN) reported third-quarter 2025 pro forma earnings of $1.99 per share, which beat the Zacks Consensus Estimate by 0.5%. However, the bottom line remained flat on a year-over-year basis.Net sales were $1.77 b ...

Core Viewpoint - Garmin reported strong third-quarter earnings with a 12% year-over-year revenue increase, but the stock fell by 9.1% due to lower-than-expected growth compared to previous quarters and high investor expectations [1][2][7]. Financial Performance - Revenue increased by 12% year-over-year, with the fitness segment seeing a significant 30% growth [2]. - The company generated $425 million in free cash flow and paid out $173 million in dividends, ending the quarter with approximately $3.9 billion in cash and equivalents [4]. Market Reaction - Despite strong earnings and an increase in profit guidance for the year, the stock's decline reflects investor disappointment over the slower revenue growth compared to a 20% increase in Q2 [2][7]. - Garmin's forward price-to-earnings (P/E) ratio reached a three-year high of about 32, indicating that the stock may have been overvalued prior to the correction [3]. Investment Opportunity - The current drop in stock price is viewed as a potential buying opportunity for investors, given the company's solid financial position and growth prospects [5].

Garmin (NYSE:GRMN) Q3 2025 Earnings Call October 29, 2025 10:30 AM ET Company ParticipantsTim Long - Managing DirectorIvan Feinseth - Chief Investment OfficerTeri Seck - Director of Investor RelationsErik Woodring - Managing DirectorDoug Boessen - CFO and TreasurerJordan Lyonnais - Equity Research AssociateCliff Pemble - President and CEOJoseph Cardoso - VP of Equity ResearchConference Call ParticipantsBen Bollin - AnalystJoe Nolan - Associate AnalystNoah Zatzkin - VP and Equity Research AnalystOperatorHell ...

Financial Data and Key Metrics Changes - Consolidated revenue increased 12% to nearly $1.8 billion, setting a new third-quarter record, despite a strong comparison from last year when revenue increased over 24% [4] - Gross margin was 59.1%, a 90 basis point decrease from the prior quarter, primarily due to higher product costs [15] - Operating income reached $457 million, up 4% year-over-year, with a pro forma EPS of $1.99 and GAAP EPS of $2.08 [4][15] Business Segment Data and Key Metrics Changes - **Fitness Segment**: Revenue increased 30% to $601 million, driven by strong demand for advanced wearables, with gross and operating margins at 60% and 32% respectively [6][7] - **Outdoor Segment**: Revenue decreased 5% to $498 million, impacted by the anniversary of the Diesel Series launch and the Phoenix 8 launch, with gross and operating margins at 66% and 34% respectively [8][10] - **Aviation Segment**: Revenue increased 18% to $240 million, with gross and operating margins at 75% and 25% respectively [11] - **Marine Segment**: Revenue increased 20% to $267 million, with gross and operating margins expanding to 56% and 19% respectively [12][13] - **Auto OEM Segment**: Revenue decreased 2% to $165 million, with a gross margin of 15% negatively impacted by increased warranty costs, resulting in an operating loss of $17 million [14] Market Data and Key Metrics Changes - By geography, double-digit growth was achieved in all three regions: 14% in APAC, 13% in EMEA, and 10% in the Americas [16] Company Strategy and Development Direction - The company is focused on maintaining a diversified business model and anticipates delivering another record year of double-digit growth in revenue, operating income, and EPS [4][6] - The launch of new products, such as the Blaze Equine Wellness System and the Phoenix 8 Pro, reflects the company's strategy to innovate and capture market share in various segments [9][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year revenue of $7.1 billion and raised full-year EPS guidance to $8.15, reflecting strong year-to-date performance [5][18] - The company is managing through tariff impacts and is focused on optimizing its supply chain structure [70] Other Important Information - The effective tax rate increased to 21.2% due to new U.S. tax legislation affecting R&D cost capitalization [17] - Free cash flow for the third quarter was $425 million, with full-year expectations of approximately $1.3 billion [17] Q&A Session Summary Question: Downward revision to outdoor guidance - Management noted that the Phoenix 8 Pro launched late in Q3, impacting expectations, and acknowledged that previous expectations may have been too high [20][21] Question: Drivers behind gross margin guide for Q4 - Management indicated that higher product costs, tariffs, and warranty accruals impacted gross margins, with Q4 being a more promotional period [22][23][24] Question: Cycle for fitness and outdoor segments - Management views the market as an ongoing opportunity for growth rather than a cyclical pattern, emphasizing strong product lines [28][29] Question: Channel inventory health - Management stated that channel inventory is healthy and lean, ready for Q4, with strong sell-out trends [36] Question: Growth in auto segment - Management anticipates revenue pressure in 2026 due to end-of-life programs but expects new programs to come online in the latter half of 2026 [41] Question: Drivers of growth in aviation segment - Both OEM and aftermarket segments are performing strongly, benefiting from a long backlog and resilient consumer behavior [42] Question: Accrued warranty costs in auto segment - Management clarified that accrued warranty costs were an isolated issue and that long-term margin targets remain unchanged [60][61] Question: Component supply environment - Management acknowledged impacts from the semiconductor market but believes it will benefit customers in the long term [62] Question: Marine segment guidance - Management noted that the end market is stabilizing, with positive consumer interest and market share gains [68]

Financial Data and Key Metrics Changes - Consolidated revenue increased 12% to nearly $1.8 billion, setting a new third-quarter record, with operating income of $457 million, up 4% year-over-year [4][14] - Pro forma EPS increased to $1.99, with full-year EPS guidance raised to $8.15, reflecting an increase of $0.15 over prior guidance [5][17] - Gross margin was 59.1%, a 90 basis point decrease from the prior quarter, while operating margin was 25.8%, a 180 basis point decrease compared to the prior quarter [14][16] Business Segment Performance - **Fitness Segment**: Revenue increased 30% to $601 million, with gross and operating margins of 60% and 32% respectively, resulting in operating income of $194 million [5][6] - **Outdoor Segment**: Revenue decreased 5% to $498 million, with gross and operating margins of 66% and 34% respectively, resulting in operating income of $170 million [8][10] - **Aviation Segment**: Revenue increased 18% to $240 million, with gross and operating margins of 75% and 25% respectively, resulting in operating income of $61 million [11] - **Marine Segment**: Revenue increased 20% to $267 million, with gross and operating margins of 56% and 19% respectively, resulting in operating income of $49 million [12][13] - **Auto OEM Segment**: Revenue decreased 2% to $165 million, with a gross margin of 15, resulting in an operating loss of $17 million [14] Market Data and Key Metrics Changes - Double-digit growth was achieved in all three regions: APAC (14%), EMEA (13%), and Americas (10%) [15] - Inventory increased year-over-year to approximately $1.9 billion, reflecting a strategy to increase inventory of high-demand product lines [16] Company Strategy and Industry Competition - The company is focused on maintaining a diversified business model and leveraging product innovation to capture market share in the wearables market [28] - The launch of new products, such as the Blaze Equine Wellness System, indicates a strategy to enter underserved markets [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving another record year of double-digit growth in revenue, operating income, and EPS, driven by strong demand entering the holiday season [5][4] - The company acknowledged challenges in the outdoor segment due to product release cycles but remains optimistic about long-term growth [10][21] Other Important Information - The effective tax rate increased to 21.2% due to new U.S. tax legislation affecting R&D cost capitalization [17] - Free cash flow for the third quarter was $425 million, with expectations of approximately $1.3 billion for the full year [16] Q&A Session Summary Question: What are the main drivers behind the downward revision to outdoor guidance? - Management noted that the Phoenix 8 Pro launched late in Q3, impacting its performance, and acknowledged that expectations may have been too high initially [19][21] Question: Can you elaborate on the implied gross margin guide for Q4? - Management indicated that higher product costs, tariffs, and warranty accruals impacted gross margins, with Q4 being a more promotional period [22][24] Question: How does the company view the cycle for fitness and outdoor segments? - Management sees ongoing opportunities for growth rather than cyclical ups and downs, emphasizing strong market share potential [27][28] Question: What is the health of channel inventory? - Management reported that channel inventory is healthy, with strong sell-out trends in preparation for Q4 [35] Question: What are the expectations for auto OEM growth going into next year? - Management anticipates revenue pressure in 2026 as legacy programs wind down, but expects new programs to come online in the latter half of 2026 [38] Question: What is driving growth in the fitness business? - Growth is attributed to strong consumer behavior and new user registrations across various fitness products [41][42] Question: What is the outlook for the marine segment? - Management noted a stabilized end market with positive consumer interest and market share gains in various categories [56]

Consolidated Q3 2025 Revenue Operating income Operating margin $1.77B 25.8% 12% y/y growth $457M 4% y/y growth Q3 2025 Earnings October 29, 2025 Safe Harbor Statement These materials include 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 fi ...

GPS device maker Garmin on Wednesday raised its adjusted profit forecast for the year, but reported a rise in operating expenses and decline in quarterly revenue from its outdoor and auto units. ...

Garmin (GRMN) came out with quarterly earnings of $1.99 per share, beating the Zacks Consensus Estimate of $1.98 per share. This compares to earnings of $1.99 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +0.51%. A quarter ago, it was expected that this maker of personal navigation devices would post earnings of $1.96 per share when it actually produced earnings of $2.17, delivering a surprise of +10.71%.Over the last four q ...

Core Insights - Garmin matched earnings estimates for Q3 with adjusted earnings of $1.99 per share, but sales were slightly below expectations at $1.77 billion compared to the anticipated $1.78 billion [2][4] - The company's earnings in the same quarter last year were also $1.99 per share, but sales were lower at $1.59 billion, indicating stable earnings year-over-year but growth in sales [2][4] - Following the earnings report, Garmin's stock fell over 3% in premarket trading, dropping to $240 [2][4] Financial Performance - Adjusted earnings per share for Q3 were $1.99, matching analyst expectations [2] - Sales for the September quarter were reported at $1.77 billion, slightly below the forecast of $1.78 billion [2] - Year-over-year comparison shows that sales increased from $1.59 billion in the previous year to $1.77 billion this year [2] Market Position - Garmin is recognized on the IBD Tech Leaders list, indicating its strong position within the technology sector [3] - The company has seen an upgrade in its IBD SmartSelect Composite Rating, rising to 96 from 94, reflecting improved market performance [4][5] - Garmin's stock has shown rising relative strength, although it remains shy of key benchmarks [5]