Garmin Ltd. (GRMN) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

August 2, 2023 10:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Thank you for standing by. My name is Wallace and I will be your conference operator today. At this time, I would like to welcome everyone to the Garmin Limited Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Thank you.

I would now hand the call over to Teri Seck, Director of Investor Relations, you may begin your conference.

Teri Seck

Good morning. We would like to welcome you to Garmin Limited's second quarter 2023 earnings call. Please note that the earnings press release and related slides are available at Garmin's Investor Relations site at www.garmin.com/stock. An archive of the webcast and related transcript will also be available on our website.

This earnings call includes projections and other forward-looking statements regarding Garmin Limited and its business. Any statements regarding our future financial position, revenues, segment growth rates, earnings, gross margins, operating margins, future dividends or share repurchases, market shares, product introduction, future demand for our products and plans and objectives are forward-looking statements.

The forward-looking events and circumstances discussed in this earnings call may not occur and actual results could differ materially as a result of risk factors affecting Garmin. Information concerning these risk factors is contained in our Form 10-K filed with the Securities and Exchange Commission.

Presenting on behalf of Garmin Limited this morning are Cliff Pemble, President and Chief Executive Officer; and Doug Boessen, Chief Financial Officer and Treasurer.

At this time, I would like to turn the call over to Cliff Pemble.

Clifton Pemble

Thank you, Teri. And good morning, everyone. As announced earlier today, Garmin reported second quarter consolidated revenue of $1.32 billion, up 6% over the prior year, driven by growth in three of our five business segments. Gross in operating margins were 57.5% and 21.5% respectively. And we generated $284 million of operating income in the quarter. GAAP EPS was $1.50 and pro forma EPS came in at $1.45, up 1% over the prior year.

We feel positive about our results for the first half of the year, and are updating our full year 2023 guidance accordingly. We now expect revenue of approximately $5.05 billion, and EPS of $5.15 during the year. Before turning the call over to Doug, I'll provide highlights by segment and then look at what we see ahead.

Starting with the fitness segment, revenue increased 23% to $335 million, driven by broad based growth across all product categories. Gross in operating margins were 52% and 16% respectively, resulting in improved year-over-year operating income of $54 million. During the quarter, we launched the Edge 540 and 840 cycling computers featuring dynamic performance insights, advanced mapping capabilities, and solar charging to help cyclists ride longer, smarter and train more effectively. Given the year-to-date performance and current trends, we now expect fitness revenue to grow approximately 10% for the year.