Seeking Alpha

Garmin higher after beating estimates, reaffirming guidance

  • Garmin's (GRMN +2.8%) 2013 revenue, gross margin, and and EPS guidance is unchanged.
  • Automotive/mobile revenue (49% of total) continues to fall thanks to smartphones: sales -12% Y/Y in Q2 vs. -10% in Q1. CEO Cliff Pemble: "We also anticipate that declines in the PND market will continue to be a significant headwind. [Q3] will be particularly challenging..."
  • But Aviation sales were healthy (+16% was +10% prior), and so were Marine (+7% vs. -10%) and Outdoor (+6% vs. -1%). Fitness +3% vs. +2%.
  • Outdoor, Fitness, and Aviation all have 65%-70% gross margins. Marine has a 56% GM, and Automotive/Mobile only 45%. Thus a mix shift away from PNDs lifts Garmin's margins.
  • Gross margin was 55%, +300 bps Q/Q (seasonality a factor) but -400 bps Y/Y. Op margin was 24% vs. 15% in Q1 and 28% a year ago.
  • Opex -2% Y/Y vs. -3% rev. growth.
  • CC at 10:30AM ET (webcast)
  • Q2 results, PR

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