Garmin reported its third quarter earnings Wednesday with a few hints on how it plans to market and integrate JL Audio.
Garmin told analysts that JL Audio’s margins are lower than that of its other marine audio products, but JL Audio’s margins may increase over time. This would be due to Garmin’s broader purchasing power for parts, etc. as well as its operating efficiencies “and taking advantage of the broader Garmin infrastructure,” said Garmin President and CEO Cliff Pemble. This is something Garmin is immediately focused on, he said.
Garmin expects JL Audio to represent about 15 percent of its total marine sales in the fourth quarter, which are expected to be flat with last year’s fourth quarter at $210.6 million. We calculate that at $31.6 million for JL Audio marine audio sales.
Garmin said it was looking at JL Audio’s powersports and home audio businesses as possible areas of expansion.
Pemble said of JL Audio, in addition to marine, “they also have products for aftermarket audio as well as power sports and home audio. And so consequently, they’re pretty diverse, which is exciting. It gives us some opportunities to explore some new areas. And I think each one of those has their own nuances. I think aftermarket audio is a very specific kind of play, but the expansion in power sports and also home audio are new areas of business for Garmin.”
In home audio, Pemble said Garmin plans to continue JL Audio’s business lines “and invest in an appropriate level of innovation across their various product lines.”
Regarding marine in general, Garmin said the market has been sluggish. During the third quarter ending September 30, Garmin’s marine revenue fell 7 percent to $182 million. (Garmin completed the purchase of JL Audio on September 20).
As the quarter progressed into September, Garmin sales improved. But overall, Pemble said, “The market has softened. I think everyone is reporting that and the behaviors of customers have definitely changed from what they were a year or two ago.”
Also, Garmin said it was named National Marine Electronics Association Manufacturer of the Year for the ninth year in a row.
Garmin revenue for all segments combined, including marine, outdoor, aviation, fitness and auto totaled $1.28 billion up 12 percent for the quarter with an operating income up 13 percent to $270 million. The company reported record revenue in four of its five segments.
[Corrected] It revised its full year guidance up to $5.15 billion in revenue (from an earlier $5.05 billion). It is forecasting pro forma earnings per share for the calendar year of approximately $5.25, “which includes approximately $0.05 dilutive impact related to the newly acquired JL Audio, which is unfavorably impacted by effects of purchase accounting.”