Summary
Garmin Ltd. reported a decrease in net sales and net income for the second quarter and first half of fiscal year 2022 compared to the prior year periods. While overall net sales saw a slight 1% increase for the first half, the second quarter experienced a 6% decline. This was primarily driven by a significant drop in the Fitness segment, partially offset by robust growth in the Outdoor segment. The company noted ongoing economic headwinds such as inflation, rising interest rates, and a strengthening U.S. Dollar as contributing factors to these results and expects these challenges to persist. Despite the revenue pressures, Garmin maintained a relatively stable gross margin, aided by a favorable product mix in the Outdoor segment, although this was partially offset by increased freight costs and foreign currency fluctuations. Operating expenses, particularly in Research and Development (R&D) and Selling, General, and Administrative (SG&A) expenses, increased both in absolute terms and as a percentage of revenue, impacting overall profitability. The company also highlighted its ongoing investment in Auto OEM programs, which are currently operating at a loss. Garmin ended the period with a strong liquidity position, holding approximately $2.9 billion in cash, cash equivalents, and marketable securities.
Financial Highlights
51 data points| Revenue | $1.24B |
| Cost of Revenue | $512.01M |
| Gross Profit | $728.83M |
| R&D Expenses | $201.52M |
| SG&A Expenses | $191.21M |
| Operating Expenses | $436.09M |
| Operating Income | $292.74M |
| Net Income | $257.87M |
| EPS (Basic) | $1.34 |
| EPS (Diluted) | $1.33 |
| Shares Outstanding (Basic) | 193.07M |
| Shares Outstanding (Diluted) | 193.45M |
Key Highlights
- 1Net sales decreased by 6% year-over-year in Q2 2022 to $1.24 billion, but increased by 1% for the first half of 2022 to $2.41 billion.
- 2Net income for Q2 2022 decreased by 19% to $257.9 million, and for the first half of 2022, it decreased by 13% to $469.5 million.
- 3The Fitness segment experienced a significant decline in net sales (-34% in Q2 and -32% in H1), while the Outdoor segment showed strong growth (+18% in Q2 and +32% in H1).
- 4Consolidated gross margin remained relatively stable year-over-year in Q2 but decreased by 160 basis points in H1, impacted by higher freight costs and foreign currency translation.
- 5Operating expenses increased as a percentage of revenue in both Q2 and H1, driven by higher SG&A and R&D spending.
- 6The company recognized substantial foreign currency losses, particularly in Q2, due to the strengthening U.S. Dollar against major global currencies.
- 7Garmin has initiated a $300 million share repurchase program, with approximately $269 million remaining available as of June 25, 2022.