How Fitness Saved Garmin Earnings From Auto and Outdoor Declines
Garmin released disappointing first-quarter results before the markets opened Wednesday, due in part to currency impact.
Garmin Ltd. (NASDAQ: GRMN) released its first-quarter results before the markets opened Wednesday. The company reported $0.55 in earnings per share (EPS) on $585 million in revenue, coming in below Thomson Reuters consensus estimates of $0.57 in EPS on $606.26 million in revenue. The same period last year had $0.55 in EPS on $583.22 million in revenue.
The relative strength of the U.S. dollar negatively affected revenue by roughly $38 million, or 7%, in the first quarter. If not for this impact from currency, revenues would have been in line with estimates.
Gross margin improved from the previous year to 59%, while operating margin remained strong at 19%.
The company maintained its guidance for the 2015 full year as $3.10 in EPS on $2.9 billion in revenue. There are consensus estimates of $3.10 in EPS on $2.88 billion in revenue.
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In terms of its segments, compared to the first quarter of the previous year, the company reported:
- Auto revenues decreased 11% to $216.1 million.
- Fitness revenues increased 31% to $131.0 million.
- Outdoor revenues decreased 10% to $75.9 million.
- Aviation revenues increased 2% to $98.1 million.
- Marine revenues increased 7% to $64.3 million.
Cliff Pemble, president and CEO of Garmin, commented on the earnings:
We were able to deliver solid operating results and consistent pro forma EPS in the first quarter despite the negative impact of a stronger US Dollar compared to other major currencies. These results highlight our ability to capitalize on growth opportunities in the near-term while still investing in our market share position and long-term product roadmap through increased advertising and research and development expense. These investments are expected to generate ongoing growth potential in 2015 and future years.
Garmin had $63.5 million in free cash flow at the end of March, compared to a year ago when the company had $55.6 million. At the same time, on the balance sheet Garmin reported cash and cash equivalents of $1.17 billion.
Shares of Garmin closed Tuesday up 2.3% at $47.49. Following the release of the earnings report Wednesday morning, shares were down 1% at $47.00. The stock has a consensus analyst price target of $53.73 and a 52-week trading range of $44.57 to $62.05.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
