台灣國際航電 (GRMN) 2022 Q3 法說會逐字稿

Thank you for standing by, and welcome to Garmin Ltd. Third Quarter 2022 Earnings Conference Call. (Operator Instructions) As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Teri Seck, Director of Investor Relations. Please go ahead.

感謝您的支持，歡迎參加 Garmin Ltd. 2022 年第三季度收益電話會議。 （操作員說明）提醒一下，今天的節目正在錄製中。現在我想介紹一下今天節目的主持人，投資者關係總監 Teri Seck。請繼續。

Good morning. We would like to welcome you to Garmin Ltd.'s Third Quarter 2022 Earnings Call. Please note that the earnings press release and related slides are available at Garmin's Investor Relations site on the Internet at www.garmin.com/stock. An archive of the webcast and related transcripts will also be available on our website. This earnings call includes projections and other forward-looking statements regarding Garmin Ltd. and its business. Any statements regarding our future financial position, revenues, earnings, gross margins, operating margins, future dividends or share repurchases, market shares, product introductions, future demand for our products and plans and objectives are forward-looking statements.

早上好。歡迎您參加 Garmin Ltd. 的 2022 年第三季度財報電話會議。請注意，收益新聞稿和相關幻燈片可在互聯網上的 Garmin 投資者關係網站 www.garmin.com/stock 上找到。我們的網站也將提供網絡廣播和相關成績單的存檔。本次財報電話會議包括有關 Garmin Ltd. 及其業務的預測和其他前瞻性陳述。關於我們未來財務狀況、收入、收益、毛利率、營業利潤率、未來股息或股票回購、市場份額、產品介紹、對我們產品的未來需求以及計劃和目標的任何陳述都是前瞻性陳述。

The forward-looking events and circumstances discussed in this earnings call may not occur, and actual results could differ materially as a result of risk factors affecting Garmin. Information concerning these risk factors is contained in our Form 10-K filed with the Securities and Exchange Commission. In particular, there is significant uncertainty about the duration and the impact of the COVID-19 pandemic. This means that results could change at any time, and any statement about the impact of COVID-19 on the company's business results and outlook is the best estimate based on the information available as of today's date.

本財報電話會議中討論的前瞻性事件和情況可能不會發生，實際結果可能因影響 Garmin 的風險因素而存在重大差異。有關這些風險因素的信息包含在我們向證券交易委員會提交的 10-K 表格中。特別是，COVID-19 大流行的持續時間和影響存在很大的不確定性。這意味著結果可能隨時發生變化，任何關於 COVID-19 對公司業務結果和前景影響的陳述都是基於截至今天可用信息的最佳估計。

Presenting on behalf of Garmin Ltd. this morning are Cliff Pemble, President and Chief Executive Officer; and Doug Boessen, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pemble.

今天上午代表 Garmin Ltd. 出席的是總裁兼首席執行官 Cliff Pemble； Doug Boessen，首席財務官兼財務主管。此時，我想將電話轉給 Cliff Pemble。

Thank you, Teri, and good morning, everyone. As reported earlier today, consolidated third quarter revenue came in at $1.14 billion, down 4% from the prior year. Revenue was negatively impacted by approximately $70 million due to the strengthening of the U.S. dollar relative to other currencies. Excluding this impact, revenue would have increased about 2% over the prior year.

謝謝你，泰瑞，大家早上好。正如今天早些時候報導的那樣，第三季度合併收入為 11.4 億美元，比上年下降 4%。由於美元相對於其他貨幣走強，收入受到約 7,000 萬美元的負面影響。排除這一影響，收入將比上一年增長約 2%。

While the stronger dollar negatively impacted revenue cost of goods benefited due to the weakening of the Taiwan dollar. In addition, cost of freight came down as more products are being shipped by ocean and as rates decline due to excess capacity in the shipping industry. These, combined with favorable segment mix resulted in gross margin of 58.8%, an increase of 40 basis points over the prior year.

美元走強對商品收入成本產生負面影響，但因台幣走弱而受益。此外，隨著越來越多的產品通過海運以及航運業產能過剩導致運費下降，運費成本下降。這些，再加上有利的細分市場組合，毛利率為 58.8%，比去年增加 40 個基點。

Expenses increased 4% as growth in R&D and SG&A was partially offset by advertising efficiency. This resulted in operating income of $239 million, which was down 15% from the prior year. Operating margin was solid at 21%. Considering our year-to-date performance, we are adjusting expectations for the remainder of the year. We now anticipate full year revenue of approximately $4.85 billion, a year-over-year decline of 3%. We are raising our full year EPS guidance to $4.95 on improving gross margins, increased efficiency in our expense structure and the lower full year effective tax rate. Doug will provide more details on our financial results and updated guidance in a moment but first, I'll provide highlights on the performance and outlook of each business segment.

由於研發和 SG&A 的增長被廣告效率部分抵消，費用增長了 4%。這導致營業收入為 2.39 億美元，比上一年下降 15%。營業利潤率穩定在 21%。考慮到我們年初至今的表現，我們正在調整今年剩餘時間的預期。我們現在預計全年收入約為 48.5 億美元，同比下降 3%。我們將全年每股收益指引提高至 4.95 美元，以提高毛利率、提高費用結構的效率以及降低全年有效稅率。道格稍後將提供有關我們財務業績和更新指導的更多詳細信息，但首先，我將重點介紹每個業務部門的業績和前景。

Starting with Fitness, revenue decreased 18% and to $280 million, primarily due to lower sales of advanced wellness wearables and indoor cycling products. Gross and operating margins were 53% and 15%, respectively, resulting in operating income of $41 million. During the quarter, we launched the index BPM smart blood pressure monitor, which measures systolic and diastolic blood pressure at home or on the go. When paired with our Garmin Connect app, users can see their measurement history and trends alongside other health stats.

從健身開始，收入下降 18% 至 2.8 億美元，主要是由於高級健康可穿戴設備和室內騎行產品的銷售額下降。毛利率和營業利潤率分別為 53% 和 15%，營業收入為 4100 萬美元。本季度，我們推出了 index BPM 智能血壓計，可在家中或旅途中測量收縮壓和舒張壓。與我們的 Garmin Connect 應用程序配合使用時，用戶可以查看他們的測量歷史記錄和趨勢以及其他健康統計數據。

We also launched the Venu Sq 2 featuring a bright AMOLED display and up to 11 days of battery life, which is nearly double that of its predecessor. Considering year-to-date performance in the Fitness segment, we are maintaining our expectation that revenue will decline 25% for the year.

我們還推出了具有明亮 AMOLED 顯示屏和長達 11 天的電池壽命的 Venu Sq 2，幾乎是其前身的兩倍。考慮到健身部門年初至今的表現，我們維持我們的預期，即今年收入將下降 25%。

Moving to outdoor. Revenue increased 5% to $340 million, driven by growth in adventure watches and inReach devices and services, but partially offset by declines in other product lines. Gross and operating margins were strong at 65% and 36%, respectively, resulting in operating income of $121 million.

搬到戶外。收入增長 5% 至 3.4 億美元，主要得益於探險手錶和 inReach 設備和服務的增長，但部分被其他產品線的下滑所抵消。毛利率和營業利潤率分別高達 65% 和 36%，營業收入為 1.21 億美元。

inReach remote communication devices and response coordination services have been a strong product category and unique differentiator for the Outdoor segment.

inReach 遠程通信設備和響應協調服務一直是戶外領域的強大產品類別和獨特差異化因素。

During the quarter, we launched the inReach Messenger, a versatile communication-focused device with global 2-way texting, location sharing and SOS capabilities. Whenever a customer presses the SOS button their communication is sent to our Garmin Response Center, which oversees and coordinates a unique response based on the situation. Since launching inReach Services in 2011, the Garmin Response Center has coordinated over 10,000 inReach SOS responses in more than 150 countries and on all 7 continents, for activities ranging from hiking and backpacking to roadside assistance in areas of poor cell phone coverage. Many customers claims that inReach products and services were instrumental in returning safely to family and friends.

在本季度，我們推出了 inReach Messenger，這是一款以通信為中心的多功能設備，具有全球雙向短信、位置共享和 SOS 功能。每當客戶按下 SOS 按鈕時，他們的通信就會發送到我們的 Garmin 響應中心，該中心會根據情況監督和協調獨特的響應。自 2011 年推出 inReach 服務以來，Garmin 響應中心已在全球 7 大洲的 150 多個國家/地區協調了超過 10,000 次 inReach SOS 響應，開展的活動包括徒步旅行和背包旅行，以及在手機信號覆蓋率低的地區提供路邊援助等活動。許多客戶聲稱，inReach 產品和服務有助於安全返回家人和朋友身邊。

Considering year-to-date performance in the Outdoor segment and current trends, we now expect revenue to grow 17% for the year. Looking next at Aviation, revenue increased 4% to $188 million, primarily driven by growth in aftermarket product lines. Demand for Aviation products remains strong, and we continue to experience higher-than-normal backlogs for our products. Supply chain constraints have improved, but continue to affect our ability to completely clear the backlog. Gross and operating margins were strong at 73% and 26%, respectively, resulting in operating income of $48 million. During the quarter, we announced that our G3000 integrated flight deck was selected by Tactical Air to modernize F5 fighter aircraft operated by the U.S. Navy and Marine Corps.

考慮到戶外領域的年初至今表現和當前趨勢，我們現在預計今年收入將增長 17%。接下來看航空，收入增長 4% 至 1.88 億美元，主要受售後市場產品線增長的推動。對航空產品的需求依然強勁，我們的產品積壓量繼續高於正常水平。供應鏈限制有所改善，但繼續影響我們徹底清除積壓的能力。毛利率和營業利潤率分別高達 73% 和 26%，營業收入為 4800 萬美元。在本季度，我們宣布我們的 G3000 綜合飛行甲板被 Tactical Air 選中，用於對美國海軍和海軍陸戰隊運營的 F5 戰鬥機進行現代化改造。

Our expanding role on the F5 demonstrates the capability and versatility of our integrated cockpit systems for use in demanding military applications. Additionally, a recent survey by Aviation International news ranked Garmin #1 in Avionics product support for the 19th consecutive year. This long period of recognition demonstrates an unwavering commitment to meet the needs of highly demanding markets from owner flown aircraft to large Part 135 commercial operators. I congratulate our team for once again earning this award, which is a testament to the quality of Garmin equipment and the amazing way our associates care for our customers. The Aviation segment has delivered solid performance so far, but supply chain constraints are affecting our ability to achieve our original plan by the end of the year. With this in mind, we are adjusting our revenue growth estimate to 7% for the year.

我們在 F5 上不斷擴大的角色展示了我們的集成駕駛艙系統在要求苛刻的軍事應用中的能力和多功能性。此外，Aviation International 新聞最近的一項調查將 Garmin 連續第 19 年評為航空電子產品支持第一名。這種長期的認可表明我們堅定不移地致力於滿足從擁有飛機的飛機到大型 Part 135 商業運營商的高要求市場的需求。我祝賀我們的團隊再次獲得此獎項，這證明了 Garmin 設備的質量以及我們的員工以驚人的方式關心我們的客戶。到目前為止，航空部門的表現穩健，但供應鏈限制正在影響我們在年底前實現原計劃的能力。考慮到這一點，我們將今年的收入增長預期調整為 7%。

Turning to the Marine segment. Revenue decreased 5% to $197 million. The Marine business is highly seasonal and Q3 typically represents the lowest quarter of the year. For the past 2 years, these seasonal trends have been difficult to predict due to the influence of the pandemic. We believe the market is returning to more typical seasonal trends. Growth in operating margins were 56% and 23%, respectively, resulting in operating income of $45 million.

轉向海洋部分。收入下降 5% 至 1.97 億美元。海事業務季節性很強，第三季度通常是一年中最低的季度。在過去的兩年中，由於大流行的影響，這些季節性趨勢難以預測。我們認為市場正在回歸更典型的季節性趨勢。營業利潤率分別增長 56% 和 23%，營業收入為 4500 萬美元。

During the quarter, we began shipping the LiveScope XR system, which operates at greater depths and expands the addressable market for live action sonar to coastal and deep lake fishing applications. We also launched the LiveScope Plus ice fishing bundle with high-resolution real-time imaging, which creates the ultimate portable solution for winter fishing. And finally, we continue to be recognized for innovation and achievements in the Marine industry. For the eighth consecutive year, the National Marine Electronics Association named Garmin Manufacturer of the Year, and we also received 5 Product of Excellence awards. I'm very proud of our accomplishments in the Marine market, and I congratulate our team on these achievements. Considering year-to-date performance in the Marine segment and the return of typical seasonality patterns, we are lowering our revenue growth estimate to 3% for the year.

在本季度，我們開始交付 LiveScope XR 系統，該系統在更深的深度運行，並將實景聲納的潛在市場擴展到沿海和深湖捕魚應用。我們還推出了具有高分辨率實時成像功能的 LiveScope Plus 冰釣套裝，為冬季釣魚創造了終極便攜解決方案。最後，我們繼續因在海洋行業的創新和成就而獲得認可。連續第八年被美國船用電子協會評為 Garmin 年度製造商，我們還獲得了 5 項卓越產品獎。我為我們在船舶市場取得的成就感到非常自豪，我祝賀我們的團隊取得這些成就。考慮到船舶部門年初至今的表現以及典型季節性模式的回歸，我們將今年的收入增長預期下調至 3%。

Looking finally at Auto, revenue decreased 2% to $136 million as declines in consumer product lines more than offset growth in OEM programs. Gross margin was 40% and the operating loss driven by investments in auto OEM programs, narrowed significantly from the prior year to $16 million. During the quarter, we announced that our Tread Navigators have been selected by Arctic Cat as standard equipment on select side-by-side off-road vehicles beginning in model year 2023.

最後看看汽車，收入下降 2% 至 1.36 億美元，因為消費產品線的下降超過了 OEM 項目的增長。毛利率為 40%，汽車 OEM 項目投資導致的經營虧損較上年顯著收窄至 1600 萬美元。在本季度，我們宣布我們的 Tread Navigator 已被北極貓選為自 2023 年款開始的精選並排越野車的標準裝備。

Considering year-to-date performance in the Automotive segment and current trends, we now expect revenue to decline 7% for the year. So that concludes my remarks. Next, Doug will walk you through additional details on our financial results. Doug?

考慮到汽車領域年初至今的表現和當前趨勢，我們現在預計今年的收入將下降 7%。我的發言到此結束。接下來，Doug 將向您詳細介紹我們的財務業績。道格？

Thanks, Cliff. Good morning, everyone. I begin by reviewing our third quarter financial results, provide comments on the balance sheet, cash flow statement, taxes or updated guidance. We posted revenue of $1.140 billion for the third quarter, representing a 4% decrease year-over-year. Gross margin was 58.8%, a 40 basis point increase compared to prior year quarter. The increase was primarily due to favorable segment mix in lower freight, partially offset by the net unfavorable impact of foreign exchange rates.

謝謝，克里夫。大家，早安。我首先審查我們的第三季度財務業績，對資產負債表、現金流量表、稅收或更新的指導意見發表評論。我們公佈第三季度收入為 11.4 億美元，同比下降 4%。毛利率為 58.8%，與去年同期相比增加 40 個基點。這一增長主要是由於較低運費的有利細分市場組合，部分被外匯匯率的淨不利影響所抵消。

Operating expense as a percentage of sales was 37.8%, a 310 basis point increase from the prior quarter. Operating income was $239 million, a 15% decrease. Operating margin was 21%, 270 basis point decrease. Our GAAP EPS was $1.09, pro forma EPS was $1.24.

營業費用佔銷售額的百分比為 37.8%，比上一季度增加 310 個基點。營業收入為 2.39 億美元，下降 15%。營業利潤率為 21%，下降 270 個基點。我們的 GAAP 每股收益為 1.09 美元，備考每股收益為 1.24 美元。

Next, look at our third quarter revenue by segment and geography. During the third quarter, growth in the Outdoor and Aviation segments were more than offset by declines in the Fitness, Marine and Auto segments. Our geography, the Americas region was down 2%. The EMEA region was negatively impacted by foreign exchange rates, excluding the impact of foreign exchange rates, EMEA sales performance put in more in line to America's sales performance.

接下來，按細分市場和地理位置查看我們第三季度的收入。第三季度，戶外和航空領域的增長被健身、航海和汽車領域的下降所抵消。我們的地理位置，美洲地區下降了 2%。歐洲、中東和非洲地區受到匯率的負面影響，排除匯率的影響，歐洲、中東和非洲地區的銷售業績與美國的銷售業績更加接近。

APAC region was up 10% with the prior year. Excluding the approximate $16 million impact of foreign exchange rates, APAC region would have been up 19% with the prior year. Looking next, operating expenses. Third quarter operating expenses increased by $18 million or 4%. Research and development increased $10 million year-over-year primarily due to engineering personnel costs. SG&A increased $12 million to prior year quarter primarily due to increases in personnel-related expenses, information technology costs.

亞太地區同比增長 10%。排除大約 1600 萬美元的外匯匯率影響，亞太地區將比上一年增長 19%。接下來是運營費用。第三季度運營費用增加了 1800 萬美元或 4%。研發同比增長 1000 萬美元，主要是由於工程人員成本。 SG&A 比上一季度增加了 1200 萬美元，主要是由於人事相關費用和信息技術成本的增加。

Advertising expense decreased approximately $4 million due to lower co-op advertising. A few highlights on the balance sheet, cash flow statement and taxes. Ended the quarter with cash and marketable securities of approximately $2.7 billion. Accounts receivable was relatively flat year-over-year and decreased sequentially to $641 million. Inventory balance increased year-over-year to approximately $1.5 billion. This increase was in line with our expectations. We've been executing our strategy to reduce freight costs through higher mix of ocean versus air shipments.

由於合作廣告減少，廣告費用減少了約 400 萬美元。資產負債表、現金流量表和稅收方面的一些亮點。本季度末現金和有價證券約為 27 億美元。應收賬款同比相對持平，環比下降至 6.41 億美元。庫存餘額同比增加至約 15 億美元。這一增長符合我們的預期。我們一直在執行我們的戰略，通過增加海運與空運的組合來降低運費。

During the third quarter of 2022, we generated free cash flow of $104 million, $100 million decrease from the prior quarter, primarily due to lower operating income, increased working capital needs. Capital expenditures for the third quarter were $50 million. We expect full year 2022 free cash flow to be approximately $450 million, capital expenditures approximately $250 million. Also during the quarter, we paid dividends of $141 million purchased $83 million of the company's shares being $186 million remaining at the end of the quarter.

在 2022 年第三季度，我們產生了 1.04 億美元的自由現金流，比上一季度減少了 1 億美元，主要是由於營業收入下降、營運資金需求增加。第三季度的資本支出為 5000 萬美元。我們預計 2022 年全年自由現金流約為 4.5 億美元，資本支出約為 2.5 億美元。同樣在本季度，我們支付了 1.41 億美元的股息，購買了 8300 萬美元的公司股票，到本季度末剩餘 1.86 億美元。

Share repurchase program authorized through December 2023. During the third quarter 2022 reported effective tax rate of 4.3% compared to 5.9% in the prior quarter. The increase in effective tax rate is primarily due to income mix by tax jurisdiction, an increase in U.S. tax deductions and credits.

股票回購計劃授權至 2023 年 12 月。2022 年第三季度報告的有效稅率為 4.3%，而上一季度為 5.9%。有效稅率的增加主要是由於稅收管轄區的收入組合，美國稅收減免和抵免的增加。

Turning next to our full year guidance. We estimate revenue of approximately $4.85 billion compared to our previous guidance of $5 billion. We expect gross margin to be approximately 57.5%, higher than our previous guidance, 56.7%, primarily due to year-to-date performance, including favorable segment mix and lower costs. We expect an operating margin of approximately 20.7%. Also, we now expect the full year 2022 pro forma effective tax rate to be approximately 8% lower than our previous guidance of 8.5% to projected full year income mix for tax rejection, results in pro forma earnings per share of approximately $4.95.

接下來是我們的全年指導。我們估計收入約為 48.5 億美元，而我們之前的指導為 50 億美元。我們預計毛利率約為 57.5%，高於我們之前的指引 56.7%，這主要是由於年初至今的表現，包括有利的細分市場組合和較低的成本。我們預計營業利潤率約為 20.7%。此外，我們現在預計 2022 年全年備考有效稅率將比我們之前對預計全年收入組合的 8.5% 的指導低約 8%，從而導致預計每股收益約為 4.95 美元。

That concludes our formal remarks. Jonathan, can you please open the line for Q&A?

我們的正式發言到此結束。喬納森，你能打開問答熱線嗎？

(Operator Instructions) And our first question comes from the line of Paul Chung from JPMorgan.

（操作員說明）我們的第一個問題來自摩根大通的 Paul Chung。

So Aviation is on track to kind of hit record annual revenues even ahead of '19 levels. If you could expand on kind of the product portfolio, where you're gaining share, where you have pricing power and what new products you're excited about? And then on the margin front, can you see operating leverage with kind of record revenues maybe heading into '23 as inflation effects and some supply chain dissipates. I know the ADS-B cycle in '19 drove those mid-30% operating profit margin. But can you get to that low 30s soon? And then I have a follow-up.

因此，航空業有望達到創紀錄的年收入，甚至超過 19 年的水平。如果您可以擴展產品組合的種類，您在哪裡獲得份額，您在哪裡擁有定價權以及您對哪些新產品感到興奮？然後在利潤率方面，隨著通貨膨脹效應和一些供應鏈的消散，您能否看到具有創紀錄收入的運營槓桿可能會進入 23 年。我知道 19 年的 ADS-B 週期推動了 30% 的營業利潤率。但是你能很快達到 30 多歲嗎？然後我有一個跟進。

Paul. I think in Aviation, we've been able to build the revenue that was vacated by the ADS-B mandate through a couple of things. We have new product lines such as our autopilot systems, which as we certify each new aircraft, we are able to offer a totally new product category to that particular group of aircraft that are out there. So, we're definitely gaining share as a new product category in autopilots. And then indicators, the stand-alone indicators, our GI 275 as well as our G5 and our standalone GPS Nav/Comm products, the GTN series have been very strong in this environment where people are retrofitting their planes.

保羅。我認為在航空領域，我們已經能夠通過幾件事來增加 ADS-B 授權所騰出的收入。我們擁有新的產品線，例如我們的自動駕駛系統，當我們對每架新飛機進行認證時，我們能夠為那裡的特定飛機組提供全新的產品類別。因此，作為自動駕駛儀的新產品類別，我們肯定會獲得份額。然後指標，獨立指標，我們的 GI 275 以及我們的 G5 和我們的獨立 GPS Nav/Comm 產品，GTN 系列在人們改裝飛機的環境中非常強大。

As far as the forward look, we're not really ready to talk about 2023, but aviation, of course, will be a market where the operating profit is driven by the investments we have to make. And so as new programs come along, which tend to be long life cycle, we sometimes have to invest in advance. So that's 1 variable that we'll look at as we think about our 2023 guidance and then also the sales volume will drive leverage. And so again, we're not quite there yet in terms of talking about 2023, but those are factors we'll consider.

就前瞻性而言，我們還沒有真正準備好談論 2023 年，但航空業當然將是一個運營利潤由我們必須進行的投資驅動的市場。因此，隨著新項目的出現，這些項目的生命週期往往很長，我們有時不得不提前投資。因此，這是我們在考慮 2023 年指導時將考慮的 1 個變量，然後銷量也將推動槓桿作用。再說一次，我們還沒有談論 2023 年，但這些是我們將考慮的因素。

Great. And then a follow-up on Fitness. You're seeing a recovery here in margins. You mentioned earlier this year FX and component inflation as some of the primary drivers for kind of the underperformance in the first half. So how are those 2 shocks evolving? And can we get back to the 20% here shortly as we head into the holiday season. And then separately on competition, you have Apple with Ultra and Google Pixel here ramping? What is the data showing you on market share? And how are you kind of protecting your niche categories? And are you adjusting prices somewhat, increasing promotions, increasing marketing? Anything you can comment there?

偉大的。然後是關於健身的後續行動。你看到這裡的利潤率正在復蘇。您今年早些時候提到外彙和成分通脹是上半年表現不佳的一些主要驅動因素。那麼這兩個衝擊是如何演變的呢？當我們進入假日季節時，我們能否很快回到這裡的 20%。然後分別在競爭中，你有蘋果的 Ultra 和谷歌的 Pixel 在這裡加速嗎？哪些數據向您展示了市場份額？你是如何保護你的利基類別的？您是否在稍微調整價格，增加促銷活動，增加營銷？有什麼可以評論的嗎？

Yes. So in terms of Fitness, FX definitely did impact us. I think in terms of the improvement we saw, it would be primarily due to product mix as we had new products in the segment. Our running categories, in particular, have been very strong with the release of the 255 and 955 series. In terms of a particular target, I think where we landed in Q3 was actually where historically, we've kind of targeted in terms of mindset around what is the performance of this segment. Fitness is a more competitive segment due to the advanced wellness wearables, so that mid-teens kind of range for operating margin is actually a very good result and that will fluctuate up and down depending on promotions and on product cycles.

是的。所以在健身方面，FX 確實影響了我們。我認為就我們看到的改進而言，這主要是由於產品組合，因為我們在該領域有新產品。尤其是隨著 255 和 955 系列的發布，我們的跑步類別非常強勁。就特定目標而言，我認為我們在第三季度達到的位置實際上是歷史上的位置，我們在圍繞這一細分市場的表現的心態方面已經有了目標。由於先進的健康可穿戴設備，健身是一個更具競爭力的細分市場，因此，十幾歲的營業利潤率範圍實際上是一個非常好的結果，並且會根據促銷和產品週期上下波動。

In terms of competition, we're always mindful of that. We still believe, even with the release of the Apple Ultra and the Google Pixel that we have unique differentiators, not the least of which is some of our products are able to have 25x the battery life of those devices. So that's a significant advantage, and we're more oriented to the unique needs of our users around activity and adventure. So we continue to believe that we can carve out unique spaces for ourselves there, and we don't believe that we're losing market share in light of that.

在競爭方面，我們始終牢記這一點。我們仍然相信，即使發布了 Apple Ultra 和 Google Pixel，我們也擁有獨特的差異化優勢，其中最重要的是我們的某些產品能夠擁有這些設備 25 倍的電池壽命。所以這是一個顯著的優勢，我們更關注用戶在活動和冒險方面的獨特需求。所以我們仍然相信我們可以在那里為自己開闢獨特的空間，我們不相信我們正在因此失去市場份額。

Our next question comes from the line of David MacGregor from Longbow Research.

我們的下一個問題來自 Longbow Research 的 David MacGregor。

I guess, I wanted to just start off by -- I think I heard you say the free cash flow guide for the year was$450 million. I was just wondering what the -- how you're thinking about inventory within that context and what your year-end targets would look like?

我想，我想開始 - 我想我聽到你說今年的自由現金流指南是 4.5 億美元。我只是想知道您在這種情況下如何考慮庫存以及您的年終目標是什麼樣的？

Yes, great question. Yes, our full year free cash flow estimate is $450 million. And inventory is a big driver of that. As you've noticed, our inventory has been increasing year-over-year and did increase here in Q3. As we look at Q4 or year-end, we would expect that our full -- our end of year inventory will be lower on a sequential basis compared to a Q3, maybe by around 10% or so and that would mean that our year-end inventory would probably be up over the comparable period in 2021 by mid-teens or so. So there will be -- and last year, comparing that to it, you saw in 2021, actually inventory increase from Q3 to Q4 about 10%.

是的，很好的問題。是的，我們全年的自由現金流估計為 4.5 億美元。庫存是其中的一大推動力。正如您所注意到的，我們的庫存一直在逐年增加，並且在第三季度確實有所增加。當我們查看第四季度或年底時，我們預計我們的全部 - 與第三季度相比，我們的年終庫存將連續下降，可能下降約 10% 左右，這意味著我們的年 -到 2021 年同期，最終庫存可能會增加十幾歲左右。所以會有 - 去年，與它相比，你在 2021 年看到，實際上庫存從第三季度到第四季度增加了大約 10%。

Okay. And then I realize it varies rather dramatically across the different segments. But can you talk a little bit about just field inventory in the field?

好的。然後我意識到它在不同的細分市場中差異很大。但是你能談談現場的現場庫存嗎？

Yes. Right now, I would say that we feel like channel inventory is mostly at reasonable levels. The one exception to that has been the indoor cycling trainers, which the channel is full of trainers from all manufacturers, not just a Garmin specific thing because of the shift from indoor cycling training during the pandemic to more outdoor cycling training. So that's the 1 area that the market is continuing to work through. But in general, we feel like the levels are mostly good.

是的。現在，我想說我們覺得渠道庫存大多處於合理水平。唯一的例外是室內騎行訓練器，該頻道充滿了來自所有製造商的訓練器，而不僅僅是 Garmin 特有的東西，因為從大流行期間的室內騎行訓練轉向更多的戶外騎行訓練。這就是市場繼續努力的第一個領域。但總的來說，我們覺得關卡大多都不錯。

The 1 thing that is a factor out there, as we look forward and really kind of difficult to predict how it will go. But retailers generally have inventory of lots of different things right now. So as they move into Q4, many have signaled that they're promoting. And so as we look at Q4 we'll be looking for signals around open-to-buy dollars and promotions that they're willing to do given their overall inventory picture.

第一件事是一個因素，正如我們期待的那樣，真的很難預測它會如何發展。但是零售商現在通常有很多不同的東西的庫存。因此，當他們進入第四季度時，許多人表示他們正在推廣。因此，當我們查看第四季度時，我們將尋找圍繞開放購買美元和他們願意根據整體庫存情況進行的促銷活動的信號。

Good. And then last question for me is just as you think forward to 2023, and I realize you're probably going to have a lot more to say with 2023 once we come to January. But just thinking at a high level, if 2023 ends up being sort of the more negative type of macro scenario and things really are down rather significantly. Can you just talk about your ability to flex OpEx and just how much flexibility you have there?

好的。然後對我來說最後一個問題就像你對 2023 年的展望一樣，我意識到一旦我們來到 1 月，你可能會對 2023 年有更多話要說。但從高層次上考慮，如果 2023 年最終成為一種更負面的宏觀情景，事情真的會大幅下降。你能談談你靈活運營支出的能力以及你有多大的靈活性嗎？

I think we do have some flexibility around OpEx, particularly in the areas of advertising and some of the discretionary areas I think that slowing some of the other things in terms of R&D commitments are more difficult or take more time to really see the result. We do have a list of priorities that we've vetted and we're committed to, regardless of the environment so that we can grow for the future. But right now, I would say that we're taking a generally cautious wait-and-see view about how things go, and we're being very careful with how we spend and grow our headcounts.

我認為我們在運營支出方面確實有一些靈活性，特別是在廣告領域和一些可自由支配的領域，我認為在研發承諾方面放慢其他一些事情更困難，或者需要更多時間才能真正看到結果。無論環境如何，我們確實有一份經過審查和承諾的優先事項清單，以便我們能夠為未來發展。但現在，我想說的是，我們對事情的進展持普遍謹慎的觀望態度，我們對如何支出和增加員工人數非常謹慎。

And our next question comes from the line of Ben Bollin from Cleveland Research.

我們的下一個問題來自 Cleveland Research 的 Ben Bollin。

Cliff, I was hoping you could speak a little bit about how you think about device refresh. Any thoughts around the composition of mix, in particular, in wearables that you think refresh represents today? And how that's evolved throughout COVID, what you saw in the last couple of years? And then I have a follow-up.

Cliff，我希望你能談談你對設備刷新的看法。對 mix 的構成有什麼想法，特別是在您認為 refresh 代表今天的可穿戴設備中嗎？以及在整個 COVID 中這是如何演變的，您在過去幾年中看到了什麼？然後我有一個跟進。

Yes. I think we are typically seeing still the majority of customers coming into our platforms as new to Garmin customers. So there's certainly an element that is people that buy a second device or a new device of some kind. And there's some secondary market for our devices as well. So they might sell them online, and then we give a new customer to reduce device. But in general, it's still slightly over a majority of those customers are new to Garmin.

是的。我認為我們通常仍然看到大多數進入我們平台的客戶對於 Garmin 客戶來說都是新客戶。所以肯定有一個因素是人們購買第二台設備或某種新設備。我們的設備也有一些二級市場。所以他們可能會在網上銷售它們，然後我們給一個新客戶減少設備。但總的來說，這些客戶中的大多數還是 Garmin 的新手。

Okay. The last question is, if I recall, last year, I believe Garmin had slightly better inventory availability versus a lot of other categories. And I was left the impression that might have benefited some of the retailer commitments into the holidays last year. Please correct me if I'm wrong, but I'm curious if that's playing into anything you're seeing this year? And then I'm also curious what you're seeing from your partners in terms of how they are thinking about working capital commitments into the holidays and beyond? Have you seen any change in how much inventory they're willing to sit on? Or how far in advance they're ordering product? That's it.

好的。最後一個問題是，如果我記得去年，我相信 Garmin 的庫存可用性比許多其他類別略高。給我留下的印像是，去年假期的一些零售商承諾可能會受益。如果我錯了，請糾正我，但我很好奇這是否會影響你今年看到的任何事情？然後我也很好奇你從你的合作夥伴那裡看到他們如何考慮在假期及以後的營運資金承諾？您是否看到他們願意持有多少庫存有任何變化？或者他們提前多長時間訂購產品？而已。

Yes. So last year, we did feel like we had availability when many others did not due to supply chain issues even so, I think we were still limited on some of the things that we could supply and some of our deliveries came very late in the quarter, which might have missed the overall holiday season. So there was a lot of dynamics last year that we won't comp this year because things are more normal. And of course, we'll have to wait and see how the customer responds in Q4 to the holiday buying season.

是的。所以去年，我們確實覺得我們有可用性，而許多其他人由於供應鏈問題而沒有，即使如此，我認為我們仍然受限於我們可以供應的一些東西，而且我們的一些交付在本季度很晚才完成，這可能錯過了整個假期。所以去年有很多動態我們今年不會參加，因為事情更正常。當然，我們將不得不拭目以待，看看客戶在第四季度對假日購物季的反應如何。

In terms of our partners, like I mentioned earlier, I think what they call open-to-buy dollars in the retail channel is something that's really important retailers do have a lot of inventory of many different things. And so they're balancing what to bring in based on what they think will sell well. and they can maximize their results as well. So it's a little bit different environment this year because last year was all about getting anything they could and this year is all about selling the right things.

就我們的合作夥伴而言，就像我之前提到的那樣，我認為他們所說的零售渠道中的開放購買美元是非常重要的，零售商確實有很多不同的東西的庫存。因此，他們正在根據他們認為會暢銷的產品來平衡引進的產品。他們也可以最大化他們的結果。所以今年的環境有點不同，因為去年是為了得到他們能得到的任何東西，而今年是為了銷售正確的東西。

And our next question comes from the line of Ivan Feinseth from Tigers Financial Partners.

我們的下一個問題來自 Tigers Financial Partners 的 Ivan Feinseth。

Congratulations on the great cadence of new product introductions. So on the blood pressure monitor, this is the second item in your index line? Or are you envisioning expanding the index as a product line now that you have the blood pressure monitor going along with the scale? And what other types of products in that segment are you thinking about?

祝賀新產品推出的節奏非常快。那麼在血壓計上，這是你指標行的第二項嗎？或者您是否正在設想將指數擴展為一個產品線，因為您已經有了血壓監測儀和體重秤？您還在考慮該細分市場中的其他哪些類型的產品？

Ivan, I would say, generally, we're always looking at new category opportunities. So index has been a great category for us as a wellness device on the scale first, and the blood pressure monitor has been a delightful surprise in terms of the interest that we've had in that and we quickly sold out what we had on hand and looking for more deliveries. So we're excited about that, and we're constantly looking at new categories to grow our business.

伊万，我想說，一般來說，我們一直在尋找新的類別機會。因此，對於我們來說，index 一直是一個很好的類別，首先是規模上的健康設備，就我們對它的興趣而言，血壓監測器是一個令人驚喜的驚喜，我們手頭上的東西很快就賣光了並尋找更多的交付。所以我們對此感到興奮，並且我們一直在尋找新的類別來發展我們的業務。

And on your new -- let's say, in wearables, can you give some indication of percentage of people who already own a Garmin product and are adding another 1 because you can tell by the activation and the connection to the your app or what percentage are new and let's say, how many people, let's say, continue to use 2 devices or, let's say, give it to a family member or had other people?

在你的新產品上——比如說，在可穿戴設備中，你能給出一些已經擁有 Garmin 產品並正在添加另一個 1 的人的百分比，因為你可以通過激活和與你的應用程序的連接來判斷，或者百分比是多少？新的，比方說，有多少人，比方說，繼續使用 2 台設備，或者比方說，把它交給家人或其他人？

Yes. I don't have specific stats in front of me on that. We do see that and track it. It's at a level less than what I mentioned earlier in terms of just people that are buying another Garmin device, but I don't have those specific stats in front of me.

是的。我面前沒有具體的統計數據。我們確實看到並跟踪它。就購買另一台 Garmin 設備的人而言，它的水平低於我之前提到的水平，但我面前沒有這些具體的統計數據。

And our next question comes from the line of Erik Woodring from Morgan Stanley.

我們的下一個問題來自摩根士丹利的 Erik Woodring。

I guess maybe, Cliff, I'll start with you, maybe just a high-level question. And that is, how do you discount or consider geopolitical risk and how that influences your manufacturing footprint? And are there any regions that you'd target as a potential source of new capacity? Or is the premise of that question, some of that a lot. And then I have a backup.

我想也許，克里夫，我先從你開始，也許只是一個高層次的問題。也就是說，您如何打折或考慮地緣政治風險以及它如何影響您的製造足跡？您是否將任何地區作為潛在的新產能來源？或者是那個問題的前提，其中一些很多。然後我有一個備份。

Yes. Erik. So geopolitical risks have been something we've dealt with since the beginning of the company. They're really not new. They tend to be shifting around the globe as things evolve. In terms of looking at new capacity, I mean, we've demonstrated recently that we have the ability and the expertise to stand up new factories in new regions such as our automotive OEM factory in Poland. We, several years ago, created a factory in China. So we have that diversity, and we're able to quickly stand up capacity where we need it. So we just constantly look at that and evaluate what our needs are.

是的。埃里克。因此，地緣政治風險是我們自公司成立以來就一直在處理的問題。他們真的不是新的。隨著事情的發展，它們往往會在全球範圍內轉移。就新產能而言，我的意思是，我們最近證明了我們有能力和專業知識在新地區建立新工廠，例如我們在波蘭的汽車 OEM 工廠。幾年前，我們在中國建立了一家工廠。所以我們擁有這種多樣性，我們能夠在需要的地方快速建立容量。因此，我們只是不斷地查看並評估我們的需求。

Okay. That's helpful. And then maybe just digging into the consumer-facing businesses that you have -- is there any way you can help us kind of understand here in the back half of the year, how we should think about volume versus pricing and which 1 is a more significant driver of growth or limiting declines versus the other? And then 1 more.

好的。這很有幫助。然後也許只是深入了解您擁有的面向消費者的業務-有什麼方法可以幫助我們在今年下半年在這裡了解我們應該如何考慮數量與價格以及哪個更重要與其他因素相比，增長的重要驅動力還是限制下降？然後還有 1 個。

Yes. I think this question of volume versus pricing, that's always the big question as you think about pricing your products and running promotions. And the name of the game is maximizing. For us, we always want to maximize the profit dollars for Garmin that allows us to be successful. So it's a big question, and I don't think anyone has a magic way to do it, but we try to balance all of those factors and also take into account the availability of products in various stages of life cycle that we can promote the older ones, for example, and allows us to keep the pricing on the newer products higher.

是的。我認為數量與定價的問題，當您考慮對產品定價和開展促銷活動時，這始終是一個大問題。遊戲的名稱是最大化。對我們而言，我們始終希望將 Garmin 的利潤最大化，從而使我們能夠成功。所以這是一個很大的問題，我認為沒有人有神奇的方法來做到這一點，但我們試圖平衡所有這些因素，並考慮到產品在生命週期各個階段的可用性，我們可以推廣例如，較舊的產品，並允許我們將新產品的定價保持在更高的水平。

Okay. That's helpful. And then last question for me, maybe this is for Doug. It's just really nice performance on the margin side, both gross and operating. Maybe if we just stick on the gross side. Can you maybe list from most to least impactful kind of the upside versus downside headwind versus tailwind drivers for the nice margin performance this quarter? And then just kind of second to that, it's just maybe helping us understand what percentage of COGS is in Taiwan dollars versus U.S. dollars. And that's it from me.

好的。這很有幫助。然後是我的最後一個問題，也許這是給 Doug 的。在毛利率方面，無論是毛利率還是運營，這都是非常不錯的表現。也許如果我們只是堅持粗略的一面。對於本季度良好的利潤率表現，您能否列出影響最大到最不影響的上行、下行逆風和順風驅動因素？其次，它可能有助於我們了解銷貨成本在台幣與美元之間的百分比。我就是這樣。

Yes. So yes, gross margin. So as you mentioned, there's a lot of different moving pieces in that gross margin number. So some of our headwinds probably on the top we have lean that 1 is just the FX impact we had on revenue. Now we do have, as Cliff mentioned, the other side of that with the strengthening of the U.S. dollar against the Taiwan dollar, there's a lower cost relating to that piece of -- but it's not able to offset all of that headwinds relating to the FX on the revenue side. Then kind of taking you back a little bit, one of our biggest headwinds we had previously related to our freight. Freight had been increasing quite a bit. year-over-year. So now we're seeing some of those freight costs decline.

是的。所以是的，毛利率。因此，正如您所提到的，該毛利率中有很多不同的變動因素。因此，我們的一些不利因素可能在頂部，我們傾向於認為 1 只是我們對收入的外匯影響。正如克利夫所說，現在我們確實有另一方面，隨著美元兌台幣走強，與這部分相關的成本較低——但它無法抵消與收入方面的外匯。然後有點帶你回來，我們以前與我們的貨運有關的最大逆風之一。運費漲了不少。一年又一年。所以現在我們看到其中一些運費成本下降了。

And it's actually declining for 2 reasons, 1 of which relating to lower freight rates. And the other 1 is that we are shipping a larger percentage of our shipments on ocean versus air, so that's given us some benefit that we have from standpoint. So those are big drivers. And you always have some other things in there relating to a segment mix from a consolidated standpoint, 1 segment has a higher percentage of the total, like, for instance, of Aviation or Outdoor increases more than other ones, that gives a benefit from that standpoint.

它實際上在下降有兩個原因，其中一個與較低的運費有關。另一個原因是，我們通過海運而不是空運運送更大比例的貨物，因此從角度來看，這給了我們一些好處。所以這些都是大驅動力。從綜合的角度來看，您總是有一些與細分市場組合相關的其他東西，1 個細分市場佔總數的百分比更高，例如，航空或戶外的增長比其他細分市場更多，這會帶來好處立場。

So -- and then also you got product mix in there. as it relates to new products that we're launching in the period of time and proposal times of the year also we had. So a lot of different mixes.

所以 - 然後你也有產品組合。因為它與我們在一年中的時間段和提案時間推出的新產品有關。所以有很多不同的組合。

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Teri Seck for any further remarks.

這確實結束了今天節目的問答環節。我想把程序交還給 Teri Seck 以作進一步的評論。

Thanks, everyone, for your time today. Doug and I are available for callbacks this afternoon. Thank you. Bye.

謝謝大家，今天的時間。道格和我今天下午有空接聽電話。謝謝你。再見。

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

女士們，先生們，感謝你們參加今天的會議。這確實結束了程序。您現在可以斷開連接。再會。