Garmin Ltd. produced a strong third quarter, with double-digit growth in each of its sectors, except for auto. The Olathe company made the largest strides in its fitness segment, bolstered by the demand for wearables, though CEO Cliff Pemble said there was potential for further expansion into aviation in the long term.
“Wearable products were a strong contributor to our third-quarter performance, and we continue to expand into new lines,” Pemble said during a Wednesday investor call.
Garmin brought in a total consolidated revenue of $722 million in the most recent quarter, up 6 percent compared to a year ago.
Of this, the company’s fitness segment brought in double-digit, year-over-year revenue growth. Within the segment, Pemble said the market has been growing, for everything from low-end trackers to high-end running watches.
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
“We’ve seen growth in those categories on a global basis,” he said. new product releases always generate excitement. But at the same time, shelf space is vitally important, so we’re working hard to have both good shelf space presence in retailers as well as strong product offerings.”
Pemble said Garmin was working to expand shelf space, with twice as much in several Best Buy stores.
Even with the launch of the Apple Watch in 2015, Pemble seemed confident.
“We don’t see any detectable impact,” he said. “Our products tend to appeal to a slightly different audience than the Apple Watch.”
Last quarter also brought a new collaboration between Garmin and fellow Kansas City tech giant Cerner Corp. Individuals with a Garmin device can now integrate their steps, cardio and other data into Cerner’s wellness solutions, the two companies announced last month.
Other segments
Though smaller in terms of growth, Garmin’s aviation segment also showed promise, Pemble said. The segment boasted an impressive 14 percent increase in revenue from the same quarter last year.
“We have a strong view of the future for that business,” Pemble said. “And currently we are running at near capacity in our current production facilities and so in order to meet the anticipated demands of the future, we felt like it was the right time to invest in our facilities. I think there are many opportunities to win business.”
Garmin recently announced an integrated flight deck modernization program for business aircraft, to help them meet future mandates. Jessica Koss, Garmin’s aviation media relations person, said the new system also provides pilots with better situational awareness tools, including synthetic vision technology and geo-referenced charts.
Pemble said Garmin’s ADS-B technology, which allows aircraft to determine and broadcast their location using satellite navigation, was also a top seller.
“That did very well for us,” he said. “We sold additional products and display systems into cockpits that were getting ADS-B upgrades. … We’re taking a conservative approach as we’re looking at Q4.”
Not so much the same story with Garmin’s auto segment. It saw a 21 percent revenue decline from the same quarter last year. Pemble said the decline was slightly steeper than previously projected, driven by a shrinking personal navigation device market.
“The weaknesses are primarily driven in Europe where the market has gotten softer,” he said. “We think in the fourth quarter there will be an opportunity to flatten that curve a little bit, but it’s somewhat of a wait-and-see situation.”
For the remainder of 2016, Garmin anticipates stronger outlooks for all of its segments except auto.
Revenue by segment
- Wearables: 32 percent growth
- Outdoor: 28 percent growth
- Marine: 12 percent growth
- Aviation: 14 percent growth
- Auto: 21 percent decline
Date:October 26, 2016