GRMN - Earnings call transcript Q1 2024

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Operator

Thank you for standing by, and welcome to the Garmin Limited First Quarter 2024 Earnings Call. [Operator Instructions] Finally, a reminder that this conference is being recorded. I would now like to turn the conference over to Teri Seck, Director of Investor Relations. Please go ahead.

Teri Seck

Good morning. welcome Garmin to XXXX First like Call. Earnings would you Ltd.'s to Quarter We the release the earnings are that note Please press Garmin's Relations www.garmin.com/stock. available and Investor site at on Internet at slides related archive on website. available the also our and transcripts related An will of be webcast This call Ltd. and statements regarding other earnings forward-looking projections Garmin includes business. its and for plans regarding statements margins, position, shares, margins, objectives dividends future financial introduction, operating statements. repurchases product growth market and segment Any revenues, future our future forward-looking are demand or and our gross rates, products share earnings, forward-looking in The results this call may affecting a events materially result factors differ actual and earnings Garmin. and circumstances risk of discussed not could as occur, in Information Form and with XX-K concerning filed Securities risk these is contained our the Commission. factors Exchange

Garmin and this Pemble, call turn Boessen, Ltd. Cliff over this Treasurer. Doug and to Cliff of Chief Officer; Financial I Pemble. are President Officer Chief and the to time, At morning on Presenting like Executive would behalf

Clifton Pemble

Thank you, Teri, and good morning, everyone.

today, new the results and operating delivered earlier in with $X.XX revenue revenue positive we trends increased XXXX. As outstanding The of segments of growth. record a consolidated XX% first at XXXX quarter double-digit experienced in quarter strong billion, the strengthened in income. first announced Consolidated Garmin quarter close with growth first X to the delivering

EPS the income rates. forma and remarkable result $XXX pro million, a to expanded Swiss resulting year-over-year. significantly prior $X.XX, XX.X% operating resulted year, year-over-year increased tax first over operating the in quarter of is margins in up Gross and up considering XX.X%, record which respectively, This XX% XX% of

previously we the mindful At very quarter And we're our lowest the financial each this segment. on that a a start, February. performance we first, of results greater QX We're same financial off in minutes. in a will great typically not business few pleased mind, with the provide in few to detail these issued with year. guidance of remarks seasonal is in results. are Doug discuss the But updating time, we're I'll and

$XXX new respectively, all product operating of million. categories, XX%, to growth and XX% wearables. to increased resulting revenue operating XX% million, business, improved Gross driven by income broad-based in margins for and $XX record with a strong advanced led demand by Starting across

the the instantly which quarter, as During we and market performance. both XXX, by product the exceptional was launched offering Forerunner great recognized a value

initiatives. wearables deeper information by the we collected quarter, Also a between which understanding the addition a glimpse, of Research overall with during research Garmin the contributing new provide to The of and intricate of wealth metrics Garmin published focus on a relationship Health researchers health sleep well-being. sleep

outdoor. wearables. Moving Gross growth to XX%, XX% margins of respectively, improved resulting $XXX with XX% income million. by $XXX primarily to driven to million, and operating operating and Revenue in increased

from SOS others. is part of annual than efforts and XXX inReach we rescue coordination SOS of released Response languages. During highlighting Response, center Emergency more services than our coordinates emergency service response the Garmin inReach countries in differentiates our XXX territories supports The importance an the quarter, which review, year-end what in important more and

with ordinary to help yesterday. beat watches extraordinary offer. X adventure as Pro Out, the highlights X and the Out docu things extraordinary original follows their This We Days hiking Phoenix people these battery also Days X well produced called accomplish docu utility released Nepal's and the devices people X as through can tools our life an of right health series series journey that metrics on rich long shows them circuit. Lingang which

was XX% margin $XX in operating million. Looking increased product and next first of X% the in margin XX%, OEM at revenue Gross improved growth $XXX quarter to million, by operating in Aviation, resulting driven to income categories.

expands new offers radar, GTN popular added weather and high display complete of for we Also storm TXI workload the displays. unveiled XXXX jet quarter, designed safety. radar aircraft popular technologies we quarter, GWX reduce optics our and options to avionics citation the during features modernization program the the this availability with highly for CJX to a and that advanced equipped During which pilot business our system improve

Turning to primarily by of the to driven Audio. the Revenue Marine segment. XX% acquisition $XXX increased JL million,

Excluding million. JL to XX%, of and quarter. X% approximately Audio, margins revenue income first resulting increased in improved operating $XX operating respectively, and Gross in the XX%

Inc. recently were of by the recognized We Builders, Year Independent as Supplier Boat

system. was addition, sonar Bassmaster the exclusively tournament a Hamer, motor EcoMap/UltraX recent for and on with champion trolling sponsored In of boat Garmin chartplotters, Angler, Classic equipped Justin LiveScope fishing our

During test XX greater clarity, at adding the the connectivity control and for map launched the quarter, family, larger Charlatters, GPS we screen options home.

live the We up sonar, deepwater at provides XX, which depth TS launched imaging underwater PanOptix X,XXX first to our feet. real-time also

loss to controllers Revenue driven recorded to finally BMW. OEM increased the primarily increased Moving of domain to million, $XXX of auto million. margin shipments $XX operating growth XX% segment. by was XX%, we with an and Gross

That to new remarks. quarter, business my clusters for full digital well vehicles, an awarded for During truck the and were industrial design we maker. concludes systems X-wheel manufacture as as instrument infotainment

Next, financial additional Doug? will results. walk you Doug through details our on

Douglas Boessen

and from segment morning, in I'd Gross was reviewing of $X.XXX year-over-year. increase by was quarter, to The the point basis XX.X%, on taxes. for offset We first to like year Thanks, begin segments due comments XXX mix. certain increase primarily everyone. implied our representing the balance cash quarter. prior partially by results, product a sheet, the financial flow margin XX% billion a increase posted Good first Cliff. quarter statement revenue mix

Operating a was Operating point expense as Operating XXX sales increase. XX% basis $XXX percentage was XXX XX.X%, million, XX.X%, a basis of income a increase. was margin decrease. point

was forma EPS was GAAP Our $X.XX, $X.XX. pro EPS

respectively. segment segments, achieved Marine XX%, and Auto had at quarter, In of also growth, double-digit revenue XX% the first growth X X the Next, with segment and growth. look our in and segment XX% or growth Outdoor AM first the by we with geography. fitness The by quarter double-digit XX% segments led

led Americas and APAC. in in growth in by we growth a EMEA, digit XX% geography, by regions, followed achieved growth By XX% all in X growth XX%

Looking next operating expenses. on

due First million engineering to quarter XX%. or by operating costs. year-over-year, increased increased million personnel and expense development primarily approximately $XX Research $XX

cash $XX quarter, primarily approximately impact highlights and the few from personnel-related the strong A SG&A expenses, and to securities, due of increased decreased million increased on audio. cash increases quarter in billion. End sequentially balance quarter. the of fourth to seasonally flow taxes. compared $X.X prior but approximately with sales statement JL including to million strong sheet, year due marketable Cash to receivable $XXX year-over-year a

and Inventory expenditures quarter for to year of from than XXXX increase prior the first million, In quarter. approximately the billion. XXXX, cash $XXX of prior million year $XX quarter the were approximately Capital $XX flow million of $X.X $XXX decreased first free we generated million, year-over-year quarter. sequentially lower the

the million tax approximately of XX.X% In our XXXX, of in rate Q&A? is rate minimum the rate compared quarter in please the X.X% our the Switzerland combined Paul, to primarily tax Increase of can requirements. increase to for paid tax tax effective line you we concludes quarter. That an first due response effective in open prior for to global dividends $XXX formal year remarks.

Operator

first JPMorgan. Cardoso [Operator question from from Joseph line the of comes Instructions] And your

Joseph Cardoso

mind and trends I quick the that takes seasonality here the help might wondering typical the you to is, relative investors whether revenue then follow-up. And given in be puts are to the we I think remainder there any relative that have keep about and of as should year different guys historical So one appreciate but in was year? could year starting a through guidance not if quarter I And in, off the updating we're are you're you shape maybe only of us X here strongly. first the

Clifton Pemble

Yes.

rest I the mind of timing think to the releases. of year as in throughout the is one thing go forward new product keep we

think the as strong had now probably had in last product we some and consider products year. of this timing the I that QX comp of releases most that was year-over-year anniversary year also the comparables new the we easy we

in have So that's part well. of mind as what we

Joseph Cardoso

maybe it. what could there strongly touch fair. you just announcements. that And of and kind or you new releases is fitness then on, like, Got across part wearables been product performing around outdoor obviously, of That's have referenced and product Cliff,

trends if curious users to other provide further both get strength demand, of granularity and to fitness replacement could there some across pricing around strength and been wearables as you outdoor. new volume as on some have versus as seeing to seeing the was I touch color the just you're well So the and potentially perhaps you're just in you relative seeing

Clifton Pemble

would across that product say fitness strong. We lineup our and is very outdoor

highly are Our on to unique, differentiated that products the products lot of market. are compared a

those around but activity, products So all known wellness, is we're to sports people for particularly something us. that things look for inspiration our

seeing we're products definitely appreciate have people Registrations strong. So things. been for those our we're

opposed that majority to are through So retail, at we're see our to Garmin users seeing as as and follow of in new coming users the we repeat. that still

the we So users line in that X overall favoring see product segments. our new between

Operator

comes question line the from from Barclays. of Wang Your George next

Dong Wang

Just outlook firstly, the comment inventory. maybe you for of kind can on

You again guys the quarter. cut inventory down March in

what's inventory curious for to your this Just year expectation compared exiting year? situation last the

Douglas Boessen

Yes.

inventory, as strong reasons our of as one due sales. the it big just was and on sequential lower to well year-over-year relates So a as basis to it was

As by our primarily increase line do year-over-year expect to end hopefully to expect it the basis, meet in enough demand. inventory inventory relates the our sales, to have sure with what we make we of we year,

Dong Wang

cash of The outlook Okay. thoughts Great. considering CapEx, and since pretty strong. on free full than you guidance CapEx lower the refreshed actually the any is updating year early But revenue in was the are not the cash free recognizing guys year. And also kind the XQ, on expected. a flow

if full the curious there's to any year Just change outlook.

Douglas Boessen

we in guidance with time. primarily into are our sales this we very in, if saw. that update time, we not cash QX that free flow our point CapEx or At updating that our we're pleased QX, update as But to came strong due cash Yes. outlook we'll flow the in at

Operator

from Ben Your the line from Research. next of question Cleveland Bollin comes

Benjamin Bollin

year-over-year Doug, sequential. within talk hoping the fitness. or were about margin gross was and Both could up outdoor we Cliff and I behavior

margin bit aware maybe talked any prices, of? mix. traction Could Just gross little you products much or encouraging the individual to product talk a components, strength in versus about there pieces You transport? about how input moving is of be

Douglas Boessen

and margin costs And that. have year-over-year also. margin. driver products, year-over-year gross actually, our for both And in fitness The of favorability costs. more new the We our lower gross higher see Product which overall, outdoor. mix for a Yes. lower we are some of biggest did year-over-year was Yes. was freight up sold

continue from standpoint. look We lower well as to both at to cost as the our component production ways

Benjamin Bollin

one they are business, quarter, to start the framing the margin here time? to X-wheel auto That's great. over for And trajectory the on we And any me at material look contribution. the wins when way vehicles how the the industrial truck last when and from is what's of performance right about the the contribute then think the

Clifton Pemble

Yes.

into certainly settle high will terms margin in the this In segment margin the a we've what Ben, how of operating in talked about scale see gross teens of in and the in typical That's industry. the into profile We're mid-single margin, digits. process and we building the of our ramp that. in that's this the kind the margin

why the that's as margin has. And controllers, shifted has you've domain mix seen so the as towards change it

In and in announced terms of of to this new This terms significant we new that in some adding QX me business, very infrastructure quarter secured of terms addition. new our revenue. volumes. had a business, We first significant planning volumes in overall in or the is pardon that is and

an is awarded business ahead of do have overall, But So that. amount of a this us. sizable that's we adder to

Operator

Erik of Your question line next the Woodring Stanley. from from Morgan comes

Erik Woodring

strong. modeling the just on some see one basis. posted super of questions. follow you first quarterly on XQ, seasonal the above don't historically, just guide But quarter. we on Maybe know to And we that to a look seasonality granular one side I up quite you Great. very a is if

So seasonality of about I'm just on that was just we look basis? as in or wondering notable there anything would anything I a not forward for we have one-off tailwinds a repeat go-forward XQ, as unusual follow-up. terms then And think

Clifton Pemble

relatively between year of product be think, year in I Eric, consider factor and was that new releases, last will both introductions QX is that new in easy of timing last creating the the one Yes, a our this of into year, factors noise by This still product to fitness with QX. QX marked quarters. towards the the comp, a especially end year happened

how other as dynamic definitely, year. will of the a we create is introductions out the generally, that year, the minds QX. for of in look And timing rest in at just of So different then our product the we new look terms in whole

Erik Woodring

but else I no Doug, in not know appreciate billion you one day a cost best then, And have earning a does. capital of slush to kind of when liquidity cash, like your you Okay. Again, today. fund. to over have it's net I rainy have that, And always gross probably of $X

of us from basis, taking you Just or work? not do of ton success. actions? put work with can wouldn't why understand seeing can you Why more accelerating organic to buybacks Obviously, a that you that those help you either an stops of organically? kind you're more on that What complement

Douglas Boessen

good Yes, question.

As reliable have it we for do relates cash, priorities being our to dividends. cash

with the a your what upon do our I depending back we for standpoint. our were market have or then conditions, you for of our business As business, a for It we conditions strategic whether they've while. manufacturing growth for you QX that share want repurchases, But priorities just mentioned, a investments strengthening is remind share that facilities consistent that repurchase. cash from in in business to looking audio acquisitions been such as are blackout and most our the relates to at for

Operator

comes the David from MacGregor line from Longbow question of Research. Next

David S. MacGregor

ask guess as channel focus inventory wanted to talk will. can think around little maybe where may lower, just across higher adjusting across about you lines, rates of patterns, channel if I a or for but levels a these around I course. lines? you And various you be inventories, your little seasonal are And sell-through inventories,

Clifton Pemble

We is channel healthy see clean any that don't concerns. this at really point. think and We inventory

of retailers big businesses, terms our are In bets on overall and across are frankly, placing not inventory inventory.

over than last buy kind supply they availability X chain. that has is been there disruption customers that now in know better in, it product when want and last of the it of the the they much So years of there's

selling So very are like rates also feel we we in. about consistent with feel good we're And quantities it. the registration very that the

David S. MacGregor

than of back quarter, the I a inventory substantial on inventory, strength inventory, implications margins you you stronger absorption, a to just margin and lot I you cost this get the to of as a the had alluded quarter as there better and business that rebuild if for are you go expected. we should maybe sort rebuild? stronger And third work fixed modeling leverage the question could operating of second obviously, a and inventory performance guess What better consequence a down be

Douglas Boessen

But us a having not structure. just cost of there that's part leveraging No, a big our really basically overheads but overall you're that's us. a the factor part some production, is just there, our for of managing mentioning cost where and do lower

David S. MacGregor

Okay. OEM, can how now? sort growth? me, would of be now is growth much you aside I some mean, the color question rate the granularity how provide way And there for versus last or of any price auto other X much around but unit segments, right the growth of setting

Clifton Pemble

unit I volumes. driven by mostly think higher it's

David S. MacGregor

the Congrats progress. on all

Operator

of Your Bank Lyonnais, next question comes Jordan of from line America. the

Jordan Lyonnais

trend those in quarter, appreciate but this you and too. softer I in on a a that the growth Asia, it's strong you see really Europe Are expecting comp to and recovery? continue markets

Clifton Pemble

OEM volumes of geographically one higher auto consider on impact is think those factor the I to regions.

tends and instance, increase out there. for revenue domain we that disproportionately produce of So the Europe, to controllers when sell,

puts performed and in very takes generally, our that. Europe. well products So because some But there's of wearable

some some, been also has -- we currency issues the me, headwind influenced region with but Asia as by due tailwind well. OEM some auto in excuse have to

So point there's about it. and factors of probably could to to try any lots one that isn't just draw conclusions there we

Operator

line KeyBanc the Noah Markets. of question Capital from [Operator And your next Instructions] comes Zatzkin from

Noah Zatzkin

there. just Maybe the Marine performance segment, on strong

then the could the Audio in? First, you could post year second, benefit expectations relative looks provide organic thoughts the then remind quarters we're hoping on just that marine this us hoping market how to in couple end you marine versus embedded was what your strong of update I now full given from of the industry? JL pretty a on guide. general, the if to an performing acquisition is get kind in of like is Audio what state And JL And quarter outperformance

Clifton Pemble

Yes.

we generally, with our expected. say what JL think I we performance line was in would

you that market huge into overall think market say kind I would think of of question It's I state market, stabilized. a right has historically as marine about know. leading growth the the not I the

the right of any boat issues kind us have kind now -- of But those people that inventories talking in we're a think the some there last past years that basis, certainly in I about. not been with is have on seen we've So and some few of And there ripples year over full significant way. general, Doug? think impacted out I

Douglas Boessen

sure. Yes,

of Audio the be to marine it about total on As business. XX% the JL relates JL expect basically, line Audio, we to revenue

Operator

a have question Research. We follow-up McGregor Longbow David from from

David S. MacGregor

down, consumer I get today. just mixing of guess we disappointing lately there's then talk macro more some numbers consumers these and and getting in here the cautious been confidence rather

-- innovation Just lot in you the of obviously, you've got how a marketplace.

about all mix, for just mix subscription that kind how terms -- new occurring the consumer maybe overpowering things you or ultimately over of consumer of mix You and strong be year? of confidence. around deteriorating leading in indicators But seems talked the down the to what and in might that the already are underneath the whatever might be at your rate terms impact you of and balance product introductions and watch seeing

Clifton Pemble

sentiment affected base are I that in generally, customer our would are the probably broadly you about. say, less that by overall hear groups

products price and market. of the bottom not tend products ranges, pricing be necessarily high our therefore, all So their kinds innovation across but of mostly the products to certainly desirability we with at have is and high

see products we XXX, product, in well. So an high-end strength in a receiving products, some of in from great strong higher-end response the seen is example, running when to products we result incredibly our that, we've as even we're release also to which and actually general, for very strong continue the but like

we of of confidence. based mixing say to I could we on their mostly people point seen needs, down a general, would are evidence haven't that lot and buying in So with

Operator

This I Teri session our over for back the concludes will Q&A for now closing turn today. to remarks. conference

Teri Seck

your time Thank you all for today.

I Doug are Bye. Have As for day. a callbacks. wonderful available usual, and

Operator

This day. concludes of today's conference call. rest your Enjoy the

may now You disconnect.

Garmin (GRMN) 1 May 242024 Q1 Earnings call transcript