Garmin reports fourth quarter results

Company reports record results and proposes dividend increase

Schaffhausen, Switzerland / February 17, 2021/ Business Wire – Garmin® Ltd. (NASDAQ: GRMN), today announced results for the fourth quarter and fiscal year ended December 26, 2020.

Highlights for fourth quarter 2020 include:

  • Total revenue of $1.35 billion, a 23% increase over the prior year quarter, led by robust growth in the marine, fitness and outdoor segments
  • Gross margin of 58.5% compared to 58.0% in the prior year quarter
  • Operating margin improved to 27.5% compared to 25.1% in the prior year quarter
  • Operating income of $371 million, increasing 34% over the prior year quarter
  • GAAP EPS was $1.73 and pro forma EPS(1) was $1.73, representing 34% growth in pro forma EPS over the prior year quarter
  • Added pregnancy tracking to Garmin Connect, providing innovative new tools to women who want to remain fit and healthy during pregnancy
  • Expanded our reach in the recreational diving market with the launch of the new Descent® Mk2i, our first dive watch featuring air integration in combination with the T1 tank transmitter
  • Garmin Autoland was named one of 2020’s greatest innovations by Popular Science and won a Top Flight Award from Aviation International News
  • Recently announced the acquisition of substantially all the assets of GEOS Worldwide Limited, a leading provider of emergency monitoring and response services for customers around the globe

Highlights for fiscal year 2020 include:

  • Fifth consecutive year of revenue and operating income growth
  • Record consolidated revenue of $4.19 billion, an 11% increase
  • Gross margin of 59.3% compared to 59.5% in the prior year
  • Operating margin of 25.2% consistent with the prior year
  • Record operating income of $1.05 billion, increasing 11% over the prior year

GAAP EPS was $5.17 and pro forma EPS(1) was $5.14, representing 16% growth over the prior year pro forma EPS

 (in thousands, except per share data)

 

13-Weeks Ended

 

 

52-Weeks Ended

 

 

 

December 26,

 

 

December 28,

 

 

YoY

 

 

December 26,

 

 

December 28,

 

 

YoY

 

 

 

2020

 

 

2019

 

 

Change

 

 

2020

 

 

2019

 

 

Change

 

Net sales

 

$

1,351,405

 

 

$

1,102,233

 

 

 

23

%

 

$

4,186,573

 

 

$

3,757,505

 

 

 

11

%

Fitness

 

 

470,811

 

 

 

372,520

 

 

 

26

%

 

 

1,317,498

 

 

 

1,047,527

 

 

 

26

%

Outdoor

 

 

411,935

 

 

 

294,819

 

 

 

40

%

 

 

1,128,081

 

 

 

917,567

 

 

 

23

%

Aviation

 

 

156,969

 

 

 

193,143

 

 

 

(19

)%

 

 

622,820

 

 

 

735,458

 

 

 

(15

)%

Marine

 

 

171,579

 

 

 

115,779

 

 

 

48

%

 

 

657,848

 

 

 

508,850

 

 

 

29

%

Auto

 

 

140,111

 

 

 

125,972

 

 

 

11

%

 

 

460,326

 

 

 

548,103

 

 

 

(16

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin %

 

 

58.5

%

 

 

58.0

%

 

 

 

 

 

 

59.3

%

 

 

59.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income %

 

 

27.5

%

 

 

25.1

%

 

 

 

 

 

 

25.2

%

 

 

25.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

 

 

$1.73

 

 

 

$1.89

 

 

 

(8

)%

 

 

$5.17

 

 

 

$4.99

 

 

 

4

%

Pro forma diluted EPS (1)

 

 

$1.73

 

 

 

$1.29

 

 

 

34

%

 

 

$5.14

 

 

 

$4.45

 

 

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including pro forma diluted EPS

 

Executive Overview from Cliff Pemble, President and Chief Executive Officer:

“In a year filled with unimaginable challenges, Garmin delivered record revenue and profits,” said Cliff Pemble, President and CEO of Garmin. “Strong demand for active lifestyle products fueled our growth, and we expect these trends to continue into 2021. I am very proud of what we have accomplished in 2020 and look forward to the opportunities and challenges of the new year.”

Fitness:

Revenue from the fitness segment grew 26% in the fourth quarter driven by strong demand for advanced wearables and cycling products. Gross margin and operating margin were 53% and 27%, respectively, resulting in 75% operating income growth. During the quarter, we launched the Tacx Boost, a powerful indoor trainer that is easy-to-use and features a magnetic brake, realistic ride-feel and manual resistance control for cyclists of all levels.

Outdoor:

Revenue from the outdoor segment grew 40% in the fourth quarter across all categories led by strong demand for adventure watches. Gross margin and operating margin were 66% and 43%, respectively, resulting in 55% operating income growth. During the quarter, we launched the Mk2i dive watch and T1 tank transmitter adding air integration to our growing lineup of dive electronics. 

Aviation:

Revenue from the aviation segment declined 19% in the fourth quarter due to fewer shipments to OEM customers and reduced contributions from ADS-B products. Gross margin and operating margin were 73% and 21%, respectively. During the quarter, we introduced smart rudder bias technology into GFC 600 autopilot systems for select twin engine aircraft, providing control assistance to the pilot in the event of an engine failure.

Marine:

Revenue from the marine segment grew 48% in the fourth quarter across multiple categories led by chartplotters. Gross margin and operating margin were 56% and 24%, respectively, resulting in 92% operating income growth. We recently updated our mid-range GPSMAP chartplotter series with higher resolution displays and more processing power, and we launched the all new StrikerTM Vivid series with enhanced color depth in an entry level fishfinder.

Auto:

Revenue from the auto segment grew 11% during the fourth quarter primarily driven by OEM programs and growth in consumer specialty categories. Gross margin was 42%, and we recorded an operating loss of $12 million in the quarter driven by investments in OEM programs. We recently introduced the new RV 1090 GPS navigator with a new 10-inch high resolution touchscreen display, which further expands our reach in the growing market for recreational vehicles.

Additional Financial Information:

Total operating expenses in the fourth quarter were $420 million, a 16% increase over the prior year.  Research and development increased by 23%, primarily due to engineering personnel costs and other expenses related to auto OEM programs. Selling, general and administrative expenses increased 15%, driven primarily by information technology costs and personnel related expenses. Advertising decreased 2%.

The effective tax rate in the fourth quarter was 14.8%. Excluding $11 million of income tax expense due to the revaluation of certain Switzerland deferred tax assets associated with Switzerland tax reform, our pro forma effective tax rate(1) in the fourth quarter of 2020 was 12.0% compared to 15.5% in the prior year quarter. The decrease in the pro forma effective tax rate is primarily due to the migration of intellectual property ownership from Switzerland to the United States.

In the fourth quarter of 2020, we generated approximately $387 million of free cash flow(1), and paid a quarterly dividend of approximately $117 million. We ended the quarter with cash and marketable securities of approximately $2.98 billion.

  • See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including pro forma effective tax rate and free cash flow.

2021 Guidance (2):

We expect full year 2021 revenue of approximately $4.6 billion with growth in all segments. We expect our full year pro forma EPS to be approximately $5.15 based upon gross margin of approximately 59.2%, operating margin of approximately 23.5% and a full year pro forma effective tax rate of approximately 10.5%.

 

 

2021 Guidance

 

Segment

 

2021 Revenue Growth Estimates

Revenue

 

~$4.6B

 

Fitness

 

~10%

Gross Margin

 

~59.2%

 

Outdoor

 

~10%

Operating Margin

 

~23.5%

 

Aviation

 

~5%

Pro forma Tax Rate

 

~10.5%

 

Marine

 

~15%

Pro forma EPS

 

~$5.15

 

Auto

 

~5%

Dividend Recommendation:

The board of directors intends to recommend to the shareholders for approval at the annual meeting to be held on June 4, 2021, a cash dividend in the amount of $2.68 per share (subject to possible adjustment based on the total amount of the dividend in Swiss Francs as approved at the annual meeting), payable in four equal installments on dates to be determined by the board. The board currently anticipates the scheduling of the dividend in four installments as follows:

 

Record Date

 

$s per share

June 30, 2021

 

June 15, 2021

 

$0.67

September 30, 2021

 

September 15, 2021

 

$0.67

December 31, 2021

 

December 15, 2021

 

$0.67

March 31, 2022

 

March 15, 2022

 

$0.67

In addition, the board has established March 31, 2021 as the payment date and March 15, 2021 as the record date for the final dividend installment of $0.61 per share, per the prior approval at the 2020 annual shareholders’ meeting. The first, second and third payments of $0.61 per share were made on June 30, 2020, September 30, 2020, and December 31, 2020, respectively. 

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.’s earnings call is as follows:

When:        Wednesday, February 17, 2021 at 10:30 a.m. Eastern

Where:       https://www.garmin.com/en-US/investors/events/

How:          Simply log on to the web at the address above or call to listen in at 855-757-3897

An archive of the live webcast will be available until February 16, 2022 on the Garmin website at www.garmin.com.  To access the replay, click on the Investors link and click over to the Events Calendar page.

This release includes projections and other forward-looking statements regarding Garmin Ltd. and its business that are commonly identified by words such as “anticipates,” “would,” “may,” “expects,” “estimates,” “plans,” “intends,” “projects,” and other words or phrases with similar meanings.  Any statements regarding the Company’s expected fiscal 2021 GAAP and pro forma estimated earnings, EPS, and effective tax rate, and the Company’s expected segment revenue growth rates, consolidated revenue, gross margins, operating margins, potential future acquisitions, currency movements, expenses, pricing, new products launches, statements relating to possible future dividends, statements related to the ongoing impact of the COVID-19 pandemic, and the Company’s plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of risk factors and uncertainties affecting Garmin, including, but not limited to, the risk factors that are described in the Annual Report on Form 10-K for the year ended December 26, 2020 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2020 Form 10-K can be downloaded from https://www.garmin.com/en-US/investors/sec/. All information provided in this release and in the attachments is as of December 26, 2020. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

This release and the attachments contain non-GAAP financial measures. A reconciliation to the nearest GAAP measure and a discussion of the Company’s use of these measures are included in the attachments.

Garmin, the Garmin logo, the Garmin delta, Descent and Tacx are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Garmin SubWave, and Striker, are trademarks of Garmin Ltd. or its subsidiaries. All other brands, product names, company names, trademarks and service marks are the properties of their respective owners. All rights reserved.

Investor Relations Contact:Media Relations Contact:
Teri Seck
913/397-8200
[email protected]
Carly Hysell
913/397-8200
[email protected]

Garmin Ltd. And Subsidiaries

 

Condensed Consolidated Statements of Income (Unaudited)

 

(In thousands, except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

 

52-Weeks Ended

 

 

 

December 26,

 

 

December 28,

 

 

December 26,

 

 

December 28,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

 

$

1,351,405

 

 

$

1,102,233

 

 

$

4,186,573

 

 

$

3,757,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

560,422

 

 

 

462,777

 

 

 

1,705,237

 

 

 

1,523,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

790,983

 

 

 

639,456

 

 

 

2,481,336

 

 

 

2,233,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

 

61,135

 

 

 

62,648

 

 

 

151,166

 

 

 

164,456

 

Selling, general and administrative expense

 

 

158,910

 

 

 

138,280

 

 

 

570,245

 

 

 

518,568

 

Research and development expense

 

 

199,672

 

 

 

162,005

 

 

 

705,685

 

 

 

605,366

 

Total operating expense

 

 

419,717

 

 

 

362,933

 

 

 

1,427,096

 

 

 

1,288,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

371,266

 

 

 

276,523

 

 

 

1,054,240

 

 

 

945,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

6,744

 

 

 

13,069

 

 

 

37,002

 

 

 

52,817

 

Foreign currency gains (losses)

 

 

12,627

 

 

 

(4,230

)

 

 

2,825

 

 

 

(16,799

)

Other income

 

 

828

 

 

 

2,051

 

 

 

9,343

 

 

 

5,618

 

Total other income (expense)

 

 

20,199

 

 

 

10,890

 

 

 

49,170

 

 

 

41,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

391,465

 

 

 

287,413

 

 

 

1,103,410

 

 

 

987,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

 

57,918

 

 

 

(73,379

)

 

 

111,086

 

 

 

34,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

333,547

 

 

$

360,792

 

 

$

992,324

 

 

$

952,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.74

 

 

$

1.90

 

 

$

5.19

 

 

$

5.01

 

Diluted

 

$

1.73

 

 

$

1.89

 

 

$

5.17

 

 

$

4.99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

191,278

 

 

 

190,165

 

 

 

191,085

 

 

 

189,931

 

Diluted

 

 

192,303

 

 

 

191,225

 

 

 

191,895

 

 

 

190,899

 


Garmin Ltd. And Subsidiaries

 

Condensed Consolidated Balance Sheets (Unaudited)

 

(In thousands, except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

December 26,

2020

 

 

December 28, 2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,458,442

 

 

$

1,027,567

 

Marketable securities

 

 

387,642

 

 

 

376,463

 

Accounts receivable, net

 

 

849,469

 

 

 

706,763

 

Inventories

 

 

762,084

 

 

 

752,908

 

Deferred costs

 

 

20,145

 

 

 

25,105

 

Prepaid expenses and other current assets

 

 

191,569

 

 

 

169,044

 

Total current assets

 

 

3,669,351

 

 

 

3,057,850

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

855,539

 

 

 

728,921

 

Operating lease right-of-use assets

 

 

94,626

 

 

 

63,589

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

 

306

 

 

 

71

 

Marketable securities

 

 

1,131,175

 

 

 

1,205,475

 

Deferred income taxes

 

 

245,455

 

 

 

268,518

 

Noncurrent deferred costs

 

 

16,510

 

 

 

23,493

 

Intangible assets, net

 

 

828,566

 

 

 

659,629

 

Other assets

 

 

189,845

 

 

 

159,253

 

Total assets

 

$

7,031,373

 

 

$

6,166,799

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

258,885

 

 

$

240,831

 

Salaries and benefits payable

 

 

181,937

 

 

 

128,426

 

Accrued warranty costs

 

 

42,643

 

 

 

39,758

 

Accrued sales program costs

 

 

109,891

 

 

 

112,578

 

Deferred revenue

 

 

86,865

 

 

 

94,562

 

Accrued advertising expense

 

 

31,950

 

 

 

35,142

 

Other accrued expenses

 

 

149,817

 

 

 

110,461

 

Income taxes payable

 

 

68,585

 

 

 

56,913

 

Dividend payable

 

 

233,644

 

 

 

217,262

 

Total current liabilities

 

 

1,164,217

 

 

 

1,035,933

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

116,844

 

 

 

114,754

 

Noncurrent income taxes

 

 

92,810

 

 

 

105,771

 

Noncurrent deferred revenue

 

 

49,934

 

 

 

67,329

 

Noncurrent operating lease liabilities

 

 

75,958

 

 

 

49,238

 

Other liabilities

 

 

15,494

 

 

 

278

 

 

 

 

 

 

 

 

 

 

Stockholders equity:

 

 

 

 

 

 

 

 

Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 191,571

   shares outstanding at December 26, 2020; and 190,686 shares outstanding

   at December 28, 2019

 

 

17,979

 

 

 

17,979

 

Additional paid-in capital

 

 

1,880,354

 

 

 

1,835,622

 

Treasury stock

 

 

(320,016

)

 

 

(345,040

)

Retained earnings

 

 

3,754,372

 

 

 

3,229,061

 

Accumulated other comprehensive income

 

 

183,427

 

 

 

55,874

 

Total stockholders equity

 

 

5,516,116

 

 

 

4,793,496

 

Total liabilities and stockholders equity

 

$

7,031,373

 

 

$

6,166,799

 


Garmin Ltd. And Subsidiaries

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

52-Weeks Ended

 

 

 

December 26, 2020

 

 

December 28, 2019

 

Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

992,324

 

 

$

952,486

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

78,121

 

 

 

71,921

 

Amortization

 

 

48,594

 

 

 

34,254

 

Gain on sale of property and equipment

 

 

(1,799

)

 

 

(233

)

Unrealized foreign currency (gains) losses

 

 

(9,873

)

 

 

18,663

 

Deferred income taxes

 

 

6,931

 

 

 

(88,358

)

Stock compensation expense

 

 

80,885

 

 

 

63,400

 

Realized (gains) losses on marketable securities

 

 

(1,392

)

 

 

(799

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net of allowance for doubtful accounts

 

 

(108,859

)

 

 

(123,401

)

Inventories

 

 

28,726

 

 

 

(170,169

)

Other current and non-current assets

 

 

(33,690

)

 

 

(86,073

)

Accounts payable

 

 

1,447

 

 

 

26,192

 

Other current and non-current liabilities

 

 

87,761

 

 

 

36,660

 

Deferred revenue

 

 

(25,211

)

 

 

(11,032

)

Deferred costs

 

 

11,973

 

 

 

9,335

 

Income taxes payable

 

 

(20,671

)

 

 

(34,297

)

Net cash provided by operating activities

 

 

1,135,267

 

 

 

698,549

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(185,401

)

 

 

(118,031

)

Proceeds from sale of property and equipment

 

 

1,977

 

 

 

529

 

Purchase of intangible assets

 

 

(2,065

)

 

 

(2,377

)

Purchase of marketable securities

 

 

(1,052,640

)

 

 

(789,352

)

Redemption of marketable securities

 

 

1,126,253

 

 

 

758,774

 

Acquisitions, net of cash acquired

 

 

(148,648

)

 

 

(300,289

)

Net cash used in investing activities

 

 

(260,524

)

 

 

(450,746

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Dividends

 

 

(450,631

)

 

 

(417,264

)

Proceeds from issuance of treasury stock related to equity awards

 

 

15,201

 

 

 

27,122

 

Purchase of treasury stock related to equity awards

 

 

(26,330

)

 

 

(25,886

)

Net cash used in financing activities

 

 

(461,760

)

 

 

(416,028

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

18,127

 

 

 

(5,942

)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

431,110

 

 

 

(174,167

)

Cash, cash equivalents, and restricted cash at beginning of year

 

 

1,027,638

 

 

 

1,201,805

 

Cash, cash equivalents, and restricted cash at end of year

 

$

1,458,748

 

 

$

1,027,638

 

The following table includes supplemental financial information for the consumer auto and auto OEM operating segments that management believes is useful.

Garmin Ltd. And Subsidiaries

 

Net Sales, Gross Profit and Operating Income by Segment (Unaudited)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Auto

 

 

 

 

 

 

 

Fitness

 

 

Outdoor

 

 

Aviation

 

 

Marine

 

 

Total

Auto

 

 

Consumer

Auto

 

 

Auto

OEM

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended December 26, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

470,811

 

 

$

411,935

 

 

$

156,969

 

 

$

171,579

 

 

$

140,111

 

 

$

78,552

 

 

$

61,559

 

 

$

1,351,405

 

Gross profit

 

 

250,603

 

 

 

270,627

 

 

 

114,237

 

 

 

96,347

 

 

 

59,169

 

 

 

41,516

 

 

 

17,653

 

 

 

790,983

 

Operating income

 

 

128,809

 

 

 

179,028

 

 

 

33,718

 

 

 

41,530

 

 

 

(11,819

)

 

 

15,836

 

 

 

(27,655

)

 

 

371,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended December 28, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

372,520

 

 

$

294,819

 

 

$

193,143

 

 

$

115,779

 

 

$

125,972

 

 

$

88,868

 

 

$

37,104

 

 

$

1,102,233

 

Gross profit

 

 

179,799

 

 

 

194,601

 

 

 

137,537

 

 

 

68,935

 

 

 

58,584

 

 

 

41,945

 

 

 

16,639

 

 

 

639,456

 

Operating income

 

 

73,490

 

 

 

115,701

 

 

 

62,778

 

 

 

21,663

 

 

 

2,891

 

 

 

14,788

 

 

 

(11,897

)

 

 

276,523

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52-Weeks Ended December 26, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,317,498

 

 

$

1,128,081

 

 

$

622,820

 

 

$

657,848

 

 

$

460,326

 

 

$

275,493

 

 

$

184,833

 

 

$

4,186,573

 

Gross profit

 

 

697,539

 

 

 

739,777

 

 

 

453,008

 

 

 

384,450

 

 

 

206,562

 

 

 

139,864

 

 

 

66,698

 

 

 

2,481,336

 

Operating income

 

 

318,884

 

 

 

441,085

 

 

 

137,203

 

 

 

175,724

 

 

 

(18,656

)

 

 

41,464

 

 

 

(60,120

)

 

 

1,054,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52-Weeks Ended December 28, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,047,527

 

 

$

917,567

 

 

$

735,458

 

 

$

508,850

 

 

$

548,103

 

 

$

365,511

 

 

$

182,592

 

 

$

3,757,505

 

Gross profit

 

 

532,604

 

 

 

598,443

 

 

 

543,385

 

 

 

302,949

 

 

 

256,595

 

 

 

172,218

 

 

 

84,377

 

 

 

2,233,976

 

Operating income

 

 

191,858

 

 

 

334,041

 

 

 

252,943

 

 

 

109,876

 

 

 

56,868

 

 

 

63,299

 

 

 

(6,431

)

 

 

945,586

 


Garmin Ltd. And Subsidiaries

 

Net Sales by Geography (Unaudited)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

 

52-Weeks Ended

 

 

 

December 26,

 

 

December 28,

 

 

YoY

 

 

December 26,

 

 

December 28,

 

 

YoY

 

 

 

2020

 

 

2019

 

 

Change

 

 

2020

 

 

2019

 

 

Change

 

Net sales

 

$

1,351,405

 

 

$

1,102,233

 

 

23%

 

 

$

4,186,573

 

 

$

3,757,505

 

 

11%

 

Americas

 

 

595,720

 

 

 

528,362

 

 

13%

 

 

 

1,968,080

 

 

 

1,817,770

 

 

8%

 

EMEA

 

 

536,822

 

 

 

407,908

 

 

32%

 

 

 

1,579,749

 

 

 

1,350,533

 

 

17%

 

APAC

 

 

218,863

 

 

 

165,963

 

 

32%

 

 

 

638,744

 

 

 

589,202

 

 

8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA – Europe, Middle East and Africa

 

APAC – Asia Pacific and Australian Continent

 

Non-GAAP Financial Information

To supplement our financial results presented in accordance with GAAP, this release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: pro forma effective tax rate, pro forma net income (earnings) per share and free cash flow. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies, limiting the usefulness of the measures for comparison with other companies. Management believes providing investors with an operating view consistent with how it manages the Company provides enhanced transparency into the operating results of the Company, as described in more detail by category below. 

The tables below provide reconciliations between the GAAP and non-GAAP measures.

Pro forma effective tax rate

The Company’s income tax expense is periodically impacted by discrete tax items that are not reflective of income tax expense incurred as a result of current period earnings. Therefore, management believes disclosure of the effective tax rate and income tax provision before the effect of certain discrete tax items are important measures to permit investors’ consistent comparison between periods. 

Garmin Ltd. And Subsidiaries

 

Pro Forma Effective Tax Rate

 

(In thousands, except effective tax rate (ETR) information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

 

52-Weeks Ended

 

 

 

December 26,

 

 

December 28,

 

 

December 26,

 

 

December 28,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

$

 

 

ETR(1)

 

 

$

 

 

ETR(1)

 

 

$

 

 

ETR(1)

 

 

$

 

 

ETR(1)

 

U.S GAAP income tax provision (benefit)

 

$

57,918

 

 

14.8%

 

 

$

(73,379

)

 

(25.5)%

 

 

$

111,086

 

 

10.1%

 

 

$

34,736

 

 

3.5%

 

Pro forma discrete tax items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Uncertain Tax Reserve Release (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,308

 

 

 

 

 

 

 

 

 

 

 

 

 

Switzerland deferred tax assets (3)

 

 

(11,016

)

 

 

 

 

 

 

117,989

 

 

 

 

 

 

 

(11,016

)

 

 

 

 

 

 

117,989

 

 

 

 

 

Pro forma income tax provision

 

$

46,902

 

 

12.0%

 

 

$

44,610

 

 

15.5%

 

 

$

114,378

 

 

10.4%

 

 

$

152,725

 

 

15.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Effective tax rate is calculated by taking the income tax provision divided by income before taxes, as presented on the face of the Condensed Consolidated Statements of Income.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) In second quarter 2020, the Company recognized a $14.3 million income tax benefit due to the release of uncertain tax position reserves associated with the 2014 intercompany restructuring, which was a pro forma adjustment in 2014. The impact of the reserve release is not reflective of income tax expense incurred as a result of current period earnings and therefore affects period-to-period comparability.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) In fourth quarter 2019, a $118 million income tax benefit was recognized resulting from the revaluation and step-up of certain Switzerland deferred tax assets as a result of the enactment of Switzerland Federal and Schaffhausen cantonal tax reform and related transitional measures.  In fourth quarter 2020, certain Switzerland deferred tax assets related to the Switzerland tax reform transitional measures were revalued resulting in an $11 million income tax expense. The impact of the revaluation of these Switzerland deferred tax assets is not reflective of income tax expense incurred as a result of current period earnings and therefore affects period-to-period comparability.

 

The net release of other uncertain tax position reserves, amounting to approximately $31.1 million and $28.9 million in the 52 weeks ended December 26, 2020 and December 28, 2019, respectively, have not been identified as pro forma adjustments as such items tend to be more recurring in nature.

Pro forma net income (earnings) per share

Management believes that net income (earnings) per share before the impact of foreign currency gains or losses and certain discrete income tax items, as discussed above, is an important measure in order to permit a consistent comparison of the Company’s performance between periods.

Garmin Ltd. And Subsidiaries

 

Pro Forma Net Income (Earnings) Per Share

 

(In thousands, except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

 

52-Weeks Ended

 

 

 

December 26,

 

 

December 28,

 

 

December 26,

 

 

December 28,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

GAAP net income

 

$

333,547

 

 

$

360,792

 

 

$

992,324

 

 

$

952,486

 

Foreign currency gains / losses (1)

 

 

(12,627

)

 

 

4,230

 

 

 

(2,825

)

 

 

16,799

 

Tax effect of foreign currency gains / losses (2)

 

 

1,513

 

 

 

(657

)

 

 

293

 

 

 

(2,599

)

Pro forma discrete tax items (3)

 

 

11,016

 

 

 

(117,989

)

 

 

(3,292

)

 

 

(117,989

)

Pro forma net income

 

$

333,449

 

 

$

246,376

 

 

$

986,500

 

 

$

848,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.74

 

 

$

1.90

 

 

$

5.19

 

 

$

5.01

 

Diluted

 

$

1.73

 

 

$

1.89

 

 

$

5.17

 

 

$

4.99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.74

 

 

$

1.30

 

 

$

5.16

 

 

$

4.47

 

Diluted

 

$

1.73

 

 

$

1.29

 

 

$

5.14

 

 

$

4.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

191,278

 

 

 

190,165

 

 

 

191,085

 

 

 

189,931

 

Diluted

 

 

192,303

 

 

 

191,225

 

 

 

191,895

 

 

 

190,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Foreign currency gains and losses for the Company are driven by movements of a number of currencies in relation to the U.S. Dollar and the related exchange rate impact on the significant cash, receivables, and payables held in a currency other than the functional currency at a given legal entity. However, there is minimal cash impact from such foreign currency gains and losses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) The tax effect of foreign currency gains and losses was calculated using the pro forma effective tax rate of 12.0% and 10.4% for the 13-weeks and fiscal year ended December 26, 2020, respectively, and the pro forma effective tax rate of 15.5% for the 13-weeks and fiscal year ended December 28, 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3) The 2019 and 2020 discrete tax items are discussed in the pro forma effective tax rate section above.

 

Free cash flow

Management believes that free cash flow is an important liquidity measure because it represents the amount of cash provided by operations that is available for investing and defines it as operating cash flows less capital expenditures for property and equipment. Management believes that excluding purchases of property and equipment provides a better understanding of the underlying trends in the Company’s operations and allows more accurate comparisons of the Company’s results between periods. This metric may also be useful to investors, but should not be considered in isolation as it is not a measure of cash flow available for discretionary expenditures. The most comparable GAAP measure is net cash provided by operating activities.

Garmin Ltd. And Subsidiaries

 

Free Cash Flow

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

 

52-Weeks Ended

 

 

 

December 26,

 

 

December 28,

 

 

December 26,

 

 

December 28,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net cash provided by operating activities

 

$

435,818

 

 

$

234,379

 

 

$

1,135,267

 

 

$

698,549

 

Less: purchases of property and equipment

 

 

(48,329

)

 

 

(26,562

)

 

 

(185,401

)

 

 

(118,031

)

Free Cash Flow

 

$

387,489

 

 

$

207,817

 

 

$

949,866

 

 

$

580,518

 

Forward-looking Financial Measures

The forward-looking financial measures in our 2021 guidance provided above do not consider the potential future net effect of foreign currency exchange gains and losses, certain discrete tax items and any other impacts that may be identified as pro forma adjustments in calculating the non-GAAP measures described above. 

The estimated impact of foreign currency gains and losses cannot be reasonably estimated on a forward-looking basis due to the high variability and low visibility with respect to non-operating foreign currency exchange gains and losses and the related tax effects of such gains and losses. The impact on diluted net income per share of foreign currency gains and losses, net of tax effects, was $0.01 per share for the 52-weeks ended December 26, 2020. At this time, management is unable to determine whether or not significant discrete tax items will occur in fiscal 2021 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.

About Garmin International, Inc.

Garmin International Inc. is a subsidiary of Garmin Ltd. (Nasdaq: GRMN). Garmin Ltd. is incorporated in Switzerland, and its principal subsidiaries are located in the United States, Taiwan and the United Kingdom. Garmin is a registered trademark.

All other brands, product names, company names, trademarks and service marks are the properties of their respective owners. All rights reserved.

Notice on Forward-Looking Statements

This release includes forward-looking statements regarding Garmin Ltd. and its business. Such statements are based on management’s current expectations. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of known and unknown risk factors and uncertainties affecting Garmin, including, but not limited to, the risk factors listed in the Annual Report on Form 10-K for the year ended December 28, 2019, filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of such Form 10-K is available at http: