Garmin Ltd. (NYSE:GRMN) Q3 2023 Results Conference Call November 1, 2023 10:30 AM ET

Company Participants

Teri Seck - Director, IR

Cliff Pemble - President and CEO

Doug Boessen - CFO and Treasurer

Conference Call Participants

Erik Woodring - Morgan Stanley

Joseph Cardoso - JPMorgan

George Wang - Barclays

Ben Bollin - Cleveland Research

David MacGregor - Longbow Research

Noah Zatzkin - KeyBanc

Ivan Feinseth - Tigress Financial Partners

Teri Seck

[Call Starts Abruptly] related slides are available at Garmin’s Investor Relations site on the Internet 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.

Cliff Pemble

Thanks, Teri, and good morning, everyone.

As announced earlier today, Garmin delivered outstanding results in the third quarter with strong growth in consolidated revenue, operating income and earnings. Consolidated revenue came in at $1.28 billion, up 12% over the prior year, driven by growth in four of our five business segments.

Gross and operating margins were 57% and 21.2%, respectively, resulting in operating income of $270 million, up 13% year-over-year. We registered GAAP EPS of $1.34, and pro forma EPS came in at $1.41, up 14% over the prior year. We are pleased with our third quarter results and are updating our full year 2023 guidance accordingly. We now expect revenue of approximately $5.15 billion and pro forma EPS of $5.25.

Before turning the call over to Doug, I’ll provide highlights by segment and an outlook of what we see ahead.

Starting with the fitness segment, revenue increased 26% to $353 million, a new third quarter record for the segment and a continuation of the strong performance we’ve been experiencing all year. Growth was broad-based across all categories, led by strong demand for wearables. Gross and operating margins were 54% and 21%, respectively, resulting in improved year-over-year operating income of $75 million. During the quarter, we introduced the new Venu 3 smartwatch family in two sizes as well as the value packed vivoactive 5 with a bright AMOLED display. These wearables have robust new health and wellness features, including nap detection and enhanced sleep coaching.