OLATHE, Kan. (BRAIN) — Garmin Ltd. reported a 9% year-over-year revenue decrease in the second quarter, but gains in the fitness sector helped mitigate the losses.
The earnings report comes on the heels of a cyber attack last week that shut down Garmin, preventing users from accessing some online services, including downloading activities to fitness apps. Garmin's president and CEO, Cliff Pemble, addressed the issue briefly during his opening remarks on the earnings call. He said there was no indication that any customer data — including payment information — was accessed, lost, or stolen. He added critical business systems have been restored and expects remaining systems restored in the next few days.
The call was to report on the company's second quarter, which ended June 27, well before the attack. Any financial impacts of the attack will be reported in the Q3 report.
For the quarter Garmin had total revenue of $870 million, compared to $955 million in last year's second quarter. Fitness revenue increased 17% year-over-year to $295 million, spearheaded by cycling products and advanced wearables.
Fitness gross margin was up 53% and operating margin was 24%, led by sales of Tacx indoor trainers and Edge head units.
"The increased interest in cycling is definitely a part (of the fitness growth)," Pemble said. "There was a lot of interest in these products and continues to be. There were a lot of people focusing on indoor activities, and the backlogs are very strong, so we're working to catch up with demand."
A new Tacx European manufacturing facility will be up and running later this year and will help fulfill demand, said Doug Boessen, Garmin chief financial officer and treasurer.
Pemble also noted the launch of new Edge products and acquisition of Firstbeat Analytics as additional reasons for fitness growth.
Garmin net income was $345 million, compared to $364 million in Q2 last year. Earnings per share decreased to $0.96 compared to $1.18. The marine division was the only other segment that reported year-over-year gains, growing 4%.
"Garmin delivered strong second-quarter financial results in a period filled with unprecedented challenges," said Pemble, alluding to the ongoing COVID-19 pandemic. "Business conditions rapidly improved from April lows driven by popular fitness, marine, and outdoor products. We believe these results affirm the resilient nature of our business and the strong utility of our products."
Garmin's corporate headquarters is in Olathe. Its stock is traded on the NASDAQ under the GRMN symbol. Stock quote at Marketwatch.com.
