The company faces market risks related to seasonal demand, new product introductions, OEM customer schedules, interest rates, inflation, foreign currency exchange rates, and credit performance of underlying securities. Potential legal proceedings, including patent infringement and product liability claims, pose a risk. Unfavorable segment mix and product mix can also negatively impact gross margins and operating income. The company's reliance on third-party suppliers for inventory creates inventory purchase obligations.
Financial Upside
Strong demand for wearables and adventure watches are driving revenue growth in the fitness and outdoor segments. The acquisition of JL Audio is contributing to marine segment revenue. Favorable product mix and lower costs of goods are increasing gross margins. Higher net sales and lower operating expenses are boosting operating income. The company has sufficient cash and cash flow to meet short- and long-term needs.
