Business Context and Reporting Period
Company: Garmin Ltd.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: 13-weeks and 26-weeks ended June 27, 2026
Business Overview: Garmin is a leading worldwide provider of GPS-enabled devices and applications for fitness, outdoor, aviation, marine, and auto OEM markets. The company operates as a large accelerated filer with a fiscal year ending on the last Saturday of the calendar year.
Key Financial Metrics
| Metric (in thousands) | 13-Weeks Ended June 27, 2026 |
26-Weeks Ended June 27, 2026 |
|---|---|---|
| Net Sales | $2,022,092 | $3,775,582 |
| Gross Profit | $1,262,022 | $2,304,310 |
| Gross Margin | 62.4% | 61.0% |
| Operating Income | $615,508 | $1,047,173 |
| Net Income | $541,920 | $946,999 |
| Diluted EPS | $2.80 | $4.89 |
| Cash from Operations | N/A | $939,544 |
| Cash & Equivalents | $2,334,235 | $2,334,235 |
| Total Debt | $0 (No long-term debt reported) | $0 |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 11% year-over-year (YoY) for the quarter and 13% for the six-month period. Total unit sales rose approximately 9%.
- Profitability: Operating income increased 30% YoY for both the quarter and the six-month period. Net income rose 35% for the quarter and 29% for the six-month period.
- Margin Expansion: Consolidated gross margin improved by 360 basis points (bps) for the quarter and 280 bps for the six-month period, driven by favorable product mix and tariff refunds.
- Segment Performance:
- Fitness: Revenue up 25% (quarter) and 32% (YTD), driven by advanced wearables.
- Marine: Revenue up 14% (quarter) and 13% (YTD); gross margin significantly boosted by tariff refunds.
- Outdoor: Revenue declined 2% (quarter) and 3% (YTD) due to lower demand for adventure watches.
- Aviation: Revenue up 8% (quarter) and 13% (YTD).
- Foreign Currency: The company reported a $2.5 million foreign currency loss for the quarter, compared to a $23.5 million loss in the prior year quarter, primarily due to USD movements against the Euro and Taiwan Dollar.
Guidance, Outlook, and Risks
- Management Commentary: Management attributes margin improvements to favorable product mix and approximately $21 million in refunds of previously paid tariffs (IEEPA). Operating expenses increased 9% YoY, primarily due to higher personnel-related costs, but decreased as a percentage of revenue.
- Capital Allocation:
- Dividends: Shareholders approved a total annual dividend of $4.20 per share for Fiscal 2026 ($1.05 per quarter).
- Share Repurchases: The 2024 repurchase program was terminated early. A new 2026 program authorizing up to $500 million was approved in February 2026. As of June 27, 2026, $448.1 million remains available.
- Risks and Contingencies:
- Supply Chain: Global supply constraints on memory chips have increased operational complexities and costs, potentially impacting future gross margins.
- Geopolitics: Foreign currency fluctuations and changing global trade policies remain significant uncertainties.
- Legal: The company settled certain matters with no material impact. No material loss contingencies are currently expected.
- Subsequent Events: On July 20, 2026, Garmin acquired TrainingPeaks and TrainHeroic. The acquisition was not material to consolidated financial statements.
Investor Verification Checklist
- Tariff Refund Sustainability: Verify the extent to which the $21 million tariff refund impacted Q2 margins and whether similar benefits are expected in future periods.
- Memory Chip Constraints: Assess the potential long-term impact of memory chip supply constraints on cost of goods sold and gross margins.
- Outdoor Segment Trends: Monitor the decline in the Outdoor segment (specifically adventure watches) to determine if it is a temporary inventory correction or a structural demand shift.
- Share Repurchase Execution: Track the utilization of the new $500 million repurchase program and its impact on diluted share count.
- Acquisition Integration: Review the financial impact and strategic fit of the TrainingPeaks and TrainHeroic acquisitions in subsequent filings.