Garmin, which generated an 85 percent increase in Q1 free cash flow to nearly $232.4 million and paid a quarterly dividend approaching $140 million, is standing by its FY23 financial guidance that calls for approximate revenues of $5.0 billion and pro forma EPS of $5.15 a share.
In Q1, the group’s operating income slipped by 13.8 percent to $197.0 million from $228.6 million. Ebit was down by 6.0 percent to $221.8 million from $235.9 million, and net income fell by 4.4 percent year-over-year to $202.3 million from $211.6 million. Gross margin improved 40 basis points to 56.9 percent from 56.5 percent as total inventories declined by 2.4 percent to $1.48 billion. Consolidated revenues fell by 2.2 percent to $1.15 billion from $1.17 billion despite double-digit increases in four segments.
Regionally, period sales were down by double-digits in both the EMEA and APAC but rose by 7 percent to $611.7 million in the Americas. EMEA revenues fell by 10 percent to $355.9 million and were off 12 percent year-over-year in APAC at $179.9 million.
A closer look at key segments:
- Fitness revenues rose by 11 percent to $244.7 million, bolstered by strong demand for advanced wearables. Operating income soared to $10.6 million from $580,000 as the segment introduced its first running smartwatches, the Forerunner 265 and Forerunner 965, with AMOLED displays.
- Outdoor revenues slid by 27 percent to $328.7 million due to a year-over-year decline in adventure watch sales. Operating income slipped by 50 percent to $76.7 million from $152.8 million. The gross margin was 62 percent.
- Marine operating income increased by 22 percent to $71.9 million as year-over-year segment sales gained 9.8 percent to $279.0 million. Gross and operating margins were 54 percent and 26 percent, respectively.
