Garmin Ltd. (GRMN) delivered an impressive fiscal fourth-quarter performance, reporting a revenue growth of 23% year-over-year to $1.82 billion, exceeding analyst expectations of $1.70 billion. The company’s pro forma earnings per share (EPS) also outperformed projections, coming in at $2.41 compared to the expected $2.03. This marks Garmin’s sixth consecutive quarter of surpassing Wall Street estimates, reinforcing its strong financial trajectory.
Investor confidence in the company has been evident, with Garmin’s stock surging 75% over the past 12 months. In light of its strong performance, the company’s board has announced plans to increase its annual dividend by 20%, bringing it to $3.60 per share, with quarterly payments of $0.90 per share.
Looking ahead, Garmin has set ambitious financial targets for fiscal year 2025, forecasting revenue of $6.80 billion, surpassing the consensus estimate of $6.72 billion. Additionally, it projects a pro forma EPS of $7.80, also exceeding the consensus of $7.74.
Growth Across Key Segments
Garmin's strong fourth-quarter performance was fueled by substantial growth across its key business segments, particularly in fitness and outdoor categories:
- Fitness: This segment saw a significant 31% year-over-year revenue increase, reaching $539.31 million. The strong demand for wearables played a crucial role in this growth. For the full year, fitness revenue totaled $1.77 billion, with an anticipated 10% growth in 2025.
- Outdoor: Revenue in this segment climbed 29% year-over-year to $629.37 million, driven by increased sales of adventure watches. The total 2024 outdoor revenue came in at $1.96 billion, with Garmin expecting another 10% growth in 2025.
- Aviation: Revenue grew by 9% to $236.88 million, fueled by strength in both OEM and aftermarket product categories. Full-year aviation revenue totaled $877 million.
- Marine: Garmin’s marine business increased by 5% year-over-year to $251.26 million, with growth across multiple product categories. The company reported full-year marine revenue of $1.07 billion and forecasts a 4% growth rate in 2025.
- Auto OEM: This segment saw a remarkable 30% growth, reaching $165.75 million, primarily driven by demand for domain controllers. The full-year revenue for auto OEM stood at $611 million, with Garmin projecting a 7% growth rate in 2025.
Financial Strength and Profitability
Garmin’s financial metrics underscore its robust profitability. The company’s gross margin expanded by 100 basis points to 59.3%, while the operating margin improved significantly to 28.3%, up from 23.0% in the previous year. The firm also generated $399.2 million in free cash flow during the quarter, bringing its total cash and equivalents to $3.7 billion as of December 28, 2024.
For the full year, Garmin posted a revenue of $6.30 billion, reflecting a 20% year-over-year increase. This growth has been instrumental in the company’s ability to maintain a competitive edge against tech giants like Apple and Samsung in the high-end wearables market.
Competitive Positioning and Market Outlook
Garmin continues to differentiate itself through its specialization in GPS-enabled products tailored for defense and recreational markets. By focusing on high-end, specialized products, the company has managed to command premium pricing while maintaining a strong competitive position. Despite the prevalence of smartphones with built-in navigation capabilities, Garmin’s dedicated GPS devices and advanced wearables have retained a loyal customer base.
During the earnings call, management highlighted record consolidated fourth-quarter revenue, improved gross and operating margins, and record pro forma EPS of $2.41, marking a 40% increase from the prior-year quarter. Additionally, Garmin emphasized its long-term success, having delivered over 300 million products since its inception.
Forward-Looking Considerations
While Garmin remains optimistic about its growth prospects, several factors could influence its financial performance in the coming quarters. Currency exchange fluctuations, discrete tax items, and other unforeseen economic factors may impact the company's forward-looking financial measures. Nevertheless, with a strong balance sheet, a history of exceeding expectations, and a solid product pipeline, Garmin appears well-positioned for continued success in 2025 and beyond.