Garmin Ltd. GRMN reported third-quarter 2024 pro forma earnings of $1.99 per share, beating the Zacks Consensus Estimate by 36.3%. The bottom line improved 41% on a year-over-year basis.

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Net sales were $1.58 billion, which surpassed the Zacks Consensus Estimate of $1.44 billion. The figure increased 24.1% from the year-ago quarter.

Year-over-year growth in the top line was attributed to the solid momentum across Outdoor, Fitness, Aviation, Marine and Auto OEM segments.

Buoyed by strong top-line and bottom-line performances, Garmin raised its earnings guidance range for the full year. The better-than-expected third-quarter results, along with upbeat guidance, can give a fresh boost to Garmin’s share price. Shares of GRMN have soared 59.5%, outperforming the Zacks Electronics - Miscellaneous Products industry’s decline of 16%.

Garmin Ltd. Price, Consensus and EPS Surprise

Garmin Ltd. price-consensus-eps-surprise-chart | Garmin Ltd. Quote

Segmental Details

Outdoor (33.2% of Net Sales): The segment generated sales of $526.6 million in the reported quarter, up 21% year over year, driven by growth in Garmin’s adventure watches.

Fitness (29.2%): The segment generated sales of $463.8 million, which increased 31% from the year-ago quarter, owing to solid demand for the company’s wearables.

Aviation (12.9%): The segment generated sales of $204.6 million, up 3% on a year-over-year basis. This was driven by the solid momentum in the aftermarket product categories.

Marine (14%): Garmin generated sales of $222.2 million from the segment, up 22% on a year-over-year basis. This was driven by benefits from the JL Audio buyout.

Auto OEM (10.6%): The segment generated sales of $168.7 million, up 53% from the prior-year quarter. This was primarily attributed to growing shipments of domain controllers.

Operating Results

In the third quarter, the gross margin was 60%, which expanded 300 basis points (bps) from the year-ago period.

Garmin’s operating expenses of $514 million grew 12% from the prior-year quarter due to rising personnel costs in research and development and sales and marketing. As a percentage of revenues, the figure contracted 350 bps year over year to 34.6%.

The operating margin was 27.6% in the reported quarter, which expanded 640 bps year over year.

Balance Sheet & Cash Flow

As of Sept. 28, 2024, cash, cash equivalents and marketable securities were $2.42 billion, up from $2.22 billion as of June 29, 2024.

In the third quarter of 2024, Garmin generated an operating cash flow of $258 million and a free cash flow of $219 million compared with the operating cash flow of $255 million and a free cash flow of $218 million reported in the prior quarter.

The company paid out a quarterly dividend of $144 million and repurchased $20 million of shares in the reported quarter.