For the second consecutive quarter, Garmin has altered its fiscal year 2022 outlook. After lowering its annual revenue forecast by 9 percent to $5 billion in late July, the group is now forecasting FY revenues of $4.85 billion. On the upside, the Swiss company has adjusted its full-year EPS guidance higher to $4.95 on improving gross margins, better expense structure efficiencies and a lower full-year tax rate. The annual gross margin is now pegged at 57.5 percent, with an annual operating margin of 20.7 percent.
In the third quarter ended Sep. 24, net profits declined 18.6 percent year-over-year to $210.8 million from $259.0 million on a 4.3 percent decline in total revenues to $1.14 billion from $1.192 billion. Revenue was negatively impacted by $70 million due to a stronger U.S. dollar. Without that impact, total quarterly sales would have risen 2 percent year-over-year. Sales growth in the outdoor and aviation segments was more than offset by fitness, marine and auto declines. Gross margin came in at 58.8 percent versus 58.4 percent, but operating income slipped 15 percent to $239.4 million from $282.7 million. The operating margin was 21.0% for the period.
Negatively impacted by lower advanced wellness and indoor cycling product sales, fitness revenues slipped 18 percent to $279.9 million from $342.3 million in the third quarter. Segment operating income declined 45 percent to $40.9 million from $74.5 million as gross margin dipped slightly to 52.8 percent versus 53.5 percent in the year-ago period. During the period, Garmin introduced its first smart blood pressure monitor, the Index BPM, that allows for quick blood pressure measurement at home or on the go. President and CEO Clifton Pemble said the segment’s quarterly performance was in line with internal projections given the competitiveness of the category, particularly in advanced wellness wearables.
Adventure watches and inReach devices and services bolstered outdoor segment results in the third quarter. Segment sales increased 5.1 percent to $340.4 million from $323.9 million, but the operating profit slid 1.7 percent to $120.8 million from $122.9 million. The operating margin was 36.0 percent, and the gross margin came in at 64.6 percent from 65.0 percent in the year-ago period. During the period, Garmin introduced the inReach Messenger, a versatile communication-focused device with global two-way texting.
Marine segment operating profit dipped 18.5 percent to $45.0 million from $55.1 million on a 5.3 percent decline in quarterly revenue to $196.5 million from $207.5 million due to typical seasonality trends. During the period, the unit launched the LiveScope Plus ice fishing bundle, described as the “ultimate portable solution for winter fishing.”
Regionally, EMEA sales fell 14 percent in the third quarter to $382.9 million and are down 10 percent year-to-date at $1.19 billion. Americas’ revenues were down 2 percent year-over-year at $563.3 million but are 3 percent higher year-to-date at $1.78 billion. APAC sales increased 10 percent to $194.3 million in the period and are up 8 percent through nine months at $580.9 million.
