Garmin's Q1 Earnings Miss Expectations, Revenues Increase Y/Y

Core Insights - Garmin Ltd. reported first-quarter 2025 pro forma earnings of $1.61 per share, missing the Zacks Consensus Estimate by 2.41%, but showing a year-over-year improvement of 13.4% [1] - Net sales were$ 1.54 billion, which also missed the Zacks Consensus Estimate by 2%, yet increased by 11.1% compared to the same quarter last year [1][2] Segment Performance - Outdoor Segment: Contributed 28.6% of net sales with $438.5 million, up 20% year-over-year, driven by strong adventure watch sales, and an operating income of$ 128.8 million with a 29% margin [3] - Fitness Segment: Accounted for 25.1% of sales at $384.7 million, reflecting a 12% year-over-year increase, supported by demand for advanced wearables, with an operating income of$ 77.7 million and a 20% margin [3] - Aviation Segment: Generated $223.1 million in sales, a 3% increase year-over-year, with an operating income of$ 48.4 million and a 22% margin [4] - Marine Segment: Sales were $319.4 million, down 2% year-over-year due to promotional timing, with an operating income of$ 86.9 million and a 27% margin [4] - Auto OEM Segment: Achieved $169.3 million in sales, a 31% year-over-year increase, but reported an operating loss of$ 8.9 million with an 18% gross margin [5] Financial Metrics - Garmin's gross margin for Q1 2025 was 57.6%, a decrease of 50 basis points, while operating expenses grew by 10% to $552 million [6] - Operating income rose to$ 333 million, a 12% year-over-year increase, with a slight expansion in operating margin to 21.7% [6] - As of March 29, 2025, Garmin held $2.67 billion in cash and marketable securities, an increase from$ 2.5 billion in the previous quarter [7] - Operating cash flow for Q1 2025 was $420.8 million, with free cash flow at$ 380.7 million [7] Guidance and Outlook - Garmin expects fiscal 2025 revenues to reach $6.85 billion, an increase from previous guidance of$ 6.80 billion, while the Zacks Consensus Estimate indicates a year-over-year decline of 13.4% [8] - The company anticipates pro forma EPS of $7.80, with the Zacks Consensus Estimate at$ 1.65, suggesting a year-over-year decline of 16.2% [8] - Expected gross margin for 2025 is 58.5%, with an operating margin of 24.8% and a pro forma effective tax rate of 16.5% [9]