Garmin Ltd. (NASDAQ: GRMN) topped market forecasts for revenue and earnings in the second quarter of 2019, sending the stock surging by 6.3% in premarket hours on Wednesday.
Total revenue of $955 million was up 7% from the same period last year, and ahead of estimates of $929 million. Revenue growth was helped by double-digit increases across most of the company’s segments.
Net income was $224 million, or $1.17 per share, compared to $190 million, or $1.00 per share, in the prior-year quarter. Adjusted EPS rose 17% to $1.16, beating forecasts of $1.01.
Gross margin increased to 60.3% from 58.5% and operating margin grew to 26.8% from 24.3% last year. Total operating expenses increased 4%. R&D expenses rose 5% year-over-year mainly due to engineering personnel costs.
During the quarter, revenue in Aviation grew 20% to $184 million as the segment continues to capitalize on the ADS-B opportunity with strong unit market share. In the Marine segment, revenue grew 13% to $151 million, driven by strong demand for chartplotters and Panoptix LiveScope sonars.
Fitness segment revenue increased 12% to $252 million, driven by strength in running and contributions from the Tacx acquisition. Revenue in the Outdoor segment rose 4% to $210 million, helped by momentum in the golf and inReach product offerings. The Auto segment saw revenues drop 13% to $157 million, due to the ongoing PND market contraction.
Garmin raised its guidance for fiscal year 2019 based on higher expectations for the aviation, marine and auto segments. The company now expects consolidated revenue of $3.6 billion and pro forma EPS of $3.90 versus its prior outlook of $3.5 billion in revenue and $3.70 in pro forma EPS.
For 2019, Garmin expects revenue in the aviation segment to grow 17% instead of the previous 10%. Marine segment revenue is expected to increase 12% instead of 10%. The revenue growth outlook for Fitness and Outdoor remains unchanged at 13% and 10% respectively. Revenue in the Auto segment is expected to decrease 15% versus the previous outlook of 18%.
Garmin’s rival Fitbit (NYSE: FIT) is scheduled to report second quarter 2019 earnings results today after the closing bell. Analysts expect the company to report a loss of $0.18 per share on revenue of $311.9 million.
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