GRMN 8-K
Garmin Ltd (GRMN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
|
|
|||
(State or other jurisdiction |
|
(Commission |
|
(I.R.S. Employer |
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On October 26, 2022, Garmin Ltd. (“the Company”) issued a press release (the “Press Release”) announcing its financial results for the fiscal third quarter ended September 24, 2022. A copy of the Press Release is attached as Exhibit 99.1.
The information in Item 2.02 and Exhibit 99.1 to this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless expressly incorporated into a filing of Garmin Ltd. under the Securities Act of 1933, as amended, or the Exchange Act made after the date hereof, the information contained in Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits. The following exhibits are furnished herewith.
Exhibit No. |
|
Description |
99.1 |
|
|
104 |
|
The cover page from this Current Report on Form 8-K, formatted in Inline XBRL (included as Exhibit 101) |
1
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
GARMIN LTD. |
|
|
October 26, 2022 |
/s/ Andrew R. Etkind |
|
Andrew R. Etkind |
|
Vice President, General Counsel and Corporate Secretary |
2
EXHIBIT 99.1
Garmin announces third quarter 2022 results
Raises 2022 EPS guidance on improved margin outlook
Schaffhausen, Switzerland / October 26, 2022/ PR Newswire – Garmin® Ltd. (NYSE: GRMN), today announced results for the third quarter ended September 24, 2022.
Highlights for third quarter 2022 include:
(In thousands, except per share information) |
|
13-Weeks Ended |
|
|
39-Weeks Ended |
|
|||||||||||||||||||
|
|
September 24, |
|
|
September 25, |
|
|
YoY |
|
|
September 24, |
|
|
September 25, |
|
|
YoY |
|
|||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|||||||
Net sales |
|
$ |
1,140,434 |
|
|
$ |
1,191,973 |
|
|
(4)% |
|
|
$ |
3,553,931 |
|
|
$ |
3,591,206 |
|
|
(1)% |
|
|||
|
Fitness |
|
|
279,875 |
|
|
|
342,316 |
|
|
(18)% |
|
|
|
772,867 |
|
|
|
1,063,642 |
|
|
(27)% |
|
||
|
Outdoor |
|
|
340,388 |
|
|
|
323,856 |
|
|
5% |
|
|
|
1,106,908 |
|
|
|
903,715 |
|
|
22% |
|
||
|
Aviation |
|
|
188,043 |
|
|
|
180,165 |
|
|
4% |
|
|
|
567,548 |
|
|
|
534,886 |
|
|
6% |
|
||
|
Marine |
|
|
196,506 |
|
|
|
207,534 |
|
|
(5)% |
|
|
|
693,369 |
|
|
|
678,698 |
|
|
2% |
|
||
|
Auto |
|
|
135,622 |
|
|
|
138,102 |
|
|
(2)% |
|
|
|
413,239 |
|
|
|
410,265 |
|
|
1% |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin % |
|
58.8% |
|
|
58.4% |
|
|
|
|
|
|
58.0% |
|
|
59.0% |
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income % |
|
21.0% |
|
|
23.7% |
|
|
|
|
|
|
21.4% |
|
|
25.2% |
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted EPS |
|
|
$1.09 |
|
|
|
$1.34 |
|
|
(19)% |
|
|
|
$3.52 |
|
|
|
$4.13 |
|
|
(15)% |
|
|||
Pro forma diluted EPS(1) |
|
|
$1.24 |
|
|
|
$1.41 |
|
|
(12)% |
|
|
|
$3.79 |
|
|
|
$4.27 |
|
|
(11)% |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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:
“Revenue was negatively impacted by the strengthening of the U.S. Dollar,” said Cliff Pemble, President and CEO of Garmin. “Despite this significant headwind, gross margin expanded and operating margin remained solid. Looking forward, we are lowering our revenue outlook for the remainder of the year consistent with the trends we are experiencing, while also raising our EPS guidance on an improving margin outlook. We believe that our strong lineup of innovative products and vertical integration strategy will allow us to remain strong in this challenging economic environment.”
Fitness:
Revenue from the fitness segment decreased 18% in the third quarter, primarily driven by lower revenue from our advanced wellness and indoor cycling products. Gross and operating margins were 53% and 15%, respectively, resulting in $41 million of operating income. During the quarter, we launched our first smart blood pressure monitor, the IndexTM BPM, allowing a user to measure and track systolic and diastolic blood pressure at home or on the go. When paired with the Garmin Connect app, users can view their measurement history and trends alongside other health stats. Also, during the quarter, we launched the Venu® Sq 2, featuring a bright AMOLED display with nearly double the battery life over its predecessor. We recently hosted our sixth annual Garmin Developers Conference where hundreds of developers virtually gathered to explore how Garmin can support their ideas and innovations.
Outdoor:
Revenue from the outdoor segment grew 5% in the third quarter primarily due to growth in adventure watches and inReach devices and services, partially offset by declines in other product lines. Gross and operating margins were 65% and 36%, respectively, resulting in $121 million of operating income. During the quarter, we launched the inReach Messenger, a versatile new communication-focused device with global two-way texting, location sharing and SOS capabilities.
Aviation:
Revenue from the aviation segment grew 4% in the third quarter driven by growth in multiple product lines, primarily in aftermarket. Gross and operating margins were 73% and 26%, respectively, resulting in $48 million of operating income. During the quarter, we announced that Tactical Air has chosen the G3000® integrated flight deck to modernize the U.S. Department of Defense fleet of Navy and Marine Corps F-5 aircraft.
Marine:
Revenue from the marine segment decreased 5% in the third quarter primarily due to the return of typical seasonality trends. Gross and operating margins were 56% and 23%, respectively, resulting in $45 million of operating income. During the quarter, we launched the LiveScope® XR System, bringing revolutionary live-scanning sonar technology to deep water fishing allowing anglers to see real-time images of fish and structure up to 500’ in front of or below the boat. We also launched the LiveScope Plus Ice Fishing Bundle, creating the ultimate portable solution for winter fishing.
Auto:
Revenue from the auto segment decreased 2% during the third quarter as declines in our consumer products more than offset the growth in OEM programs. Gross margin was 40%, and we recorded an operating loss of $16 million in the quarter driven by ongoing investments in auto OEM programs. During the quarter, we announced that our Garmin Tread® navigators had been selected by Arctic Cat, Inc. as standard equipment on select side-by-side vehicles beginning in model year 2023.
Additional Financial Information:
Total operating expenses in the third quarter were $431 million, a 4% increase over the prior year. Research and development increased 5% primarily due to engineering personnel costs. Selling, general and administrative expenses increased 7% driven primarily by personnel related expenses and information technology costs. Advertising expenses decreased 10% primarily due to lower cooperative advertising.
The effective tax rate in the third quarter was 4.3% compared to 5.9% in the prior year quarter. The year-over-year decrease in the effective tax rate is primarily due to income mix by jurisdiction and an increase in U.S. tax deductions and credits.
In the third quarter of 2022, we generated approximately $104 million of free cash flow(1). We paid a quarterly dividend of approximately $141 million and repurchased approximately $83 million of the Company’s shares within the quarter, leaving approximately $186 million remaining as of September 24, 2022 in the share repurchase program authorized through December 29, 2023. We ended the quarter with cash and marketable securities of approximately $2.7 billion.
2022 Fiscal Year Guidance:
Based on our performance in the first three quarters of 2022, we are adjusting our full year guidance. We now anticipate revenue of approximately $4.85 billion, gross margin of 57.5%, operating margin of 20.7%, and a full year effective tax rate of 8.0% resulting in EPS of approximately $4.95 (see attached discussion on Forward-looking Financial Measures).
Dividend Payment Date Confirmation:
The board of directors has established December 30, 2022, as the payment date for the next dividend installment of $0.73 per share with a record date of December 15, 2022. At the 2022 annual shareholders’ meeting, Garmin shareholders, in accordance with Swiss corporate law, approved a cash dividend in the total amount of $2.92 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 in its discretion. The first and second payments were made on June 30, 2022 and September 30, 2022. The board currently anticipates the scheduling of the remaining quarterly dividend installment as follows:
Dividend Date |
|
Record Date |
|
$ per share |
March 31, 2023 |
|
March 15, 2023 |
|
$0.73 |
Webcast Information/Forward-Looking Statements:
The information for Garmin Ltd.’s earnings call is as follows:
When: |
|
Wednesday, October 26, 2022 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 |
An archive of the live webcast will be available until October 25, 2023 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 2022 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, share repurchase programs, currency movements, expenses, pricing, new product launches, market reach, 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 25, 2021 filed by Garmin with the Securities and Exchange Commission (Commission file number 001-41118). A copy of Garmin’s 2021 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 September 24, 2022. 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, inReach, Venu, G5000, G3000, LiveScope and Tread are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Index is a trademark 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 |
|
Krista Klaus |
913/397-8200 |
|
913/397-8200 |
|
Changes in Classification and Allocation
Prior period information presented here has been recast to conform to the current period presentation. Refer to the Current Report on Form 8-K/A announcing the Company’s financial results for the fiscal first quarter ended March 26, 2022 for further description and full recast impacts.
Garmin Ltd. and Subsidiaries |
|
|||||||||||||||
Condensed Consolidated Statements of Income (Unaudited) |
|
|||||||||||||||
(In thousands, except per share information) |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks Ended |
|
|
39-Weeks Ended |
|
||||||||||
|
|
September 24, |
|
|
September 25, |
|
|
September 24, |
|
|
September 25, |
|
||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net sales |
|
$ |
1,140,434 |
|
|
$ |
1,191,973 |
|
|
$ |
3,553,931 |
|
|
$ |
3,591,206 |
|
Cost of goods sold |
|
|
469,935 |
|
|
|
496,026 |
|
|
|
1,492,126 |
|
|
|
1,472,852 |
|
Gross profit |
|
|
670,499 |
|
|
|
695,947 |
|
|
|
2,061,805 |
|
|
|
2,118,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising expense |
|
|
32,888 |
|
|
|
36,705 |
|
|
|
110,378 |
|
|
|
110,705 |
|
Selling, general and administrative expense |
|
|
189,546 |
|
|
|
177,647 |
|
|
|
571,541 |
|
|
|
530,351 |
|
Research and development expense |
|
|
208,692 |
|
|
|
198,925 |
|
|
|
619,215 |
|
|
|
573,798 |
|
Total operating expense |
|
|
431,126 |
|
|
|
413,277 |
|
|
|
1,301,134 |
|
|
|
1,214,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
239,373 |
|
|
|
282,670 |
|
|
|
760,671 |
|
|
|
903,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
10,472 |
|
|
|
6,897 |
|
|
|
26,520 |
|
|
|
21,568 |
|
Foreign currency losses |
|
|
(29,863 |
) |
|
|
(15,014 |
) |
|
|
(55,809 |
) |
|
|
(30,621 |
) |
Other income |
|
|
285 |
|
|
|
833 |
|
|
|
3,716 |
|
|
|
3,511 |
|
Total other income (expense) |
|
|
(19,106 |
) |
|
|
(7,284 |
) |
|
|
(25,573 |
) |
|
|
(5,542 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
220,267 |
|
|
|
275,386 |
|
|
|
735,098 |
|
|
|
897,958 |
|
Income tax provision |
|
|
9,419 |
|
|
|
16,347 |
|
|
|
54,785 |
|
|
|
101,894 |
|
Net income |
|
$ |
210,848 |
|
|
$ |
259,039 |
|
|
$ |
680,313 |
|
|
$ |
796,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.09 |
|
|
$ |
1.35 |
|
|
$ |
3.53 |
|
|
$ |
4.14 |
|
Diluted |
|
$ |
1.09 |
|
|
$ |
1.34 |
|
|
$ |
3.52 |
|
|
$ |
4.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
192,672 |
|
|
|
192,322 |
|
|
|
192,878 |
|
|
|
192,123 |
|
Diluted |
|
|
193,105 |
|
|
|
193,185 |
|
|
|
193,378 |
|
|
|
192,955 |
|
Garmin Ltd. and Subsidiaries |
|
|||||||
Condensed Consolidated Balance Sheets (Unaudited) |
|
|||||||
(In thousands, except per share information) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
September 24, 2022 |
|
|
December 25, 2021 |
|
||
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,082,338 |
|
|
$ |
1,498,058 |
|
Marketable securities |
|
|
378,705 |
|
|
|
347,980 |
|
Accounts receivable, net |
|
|
641,072 |
|
|
|
843,445 |
|
Inventories |
|
|
1,533,271 |
|
|
|
1,227,609 |
|
Deferred costs |
|
|
14,398 |
|
|
|
15,961 |
|
Prepaid expenses and other current assets |
|
|
318,339 |
|
|
|
328,719 |
|
Total current assets |
|
|
3,968,123 |
|
|
|
4,261,772 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
1,100,257 |
|
|
|
1,067,478 |
|
Operating lease right-of-use assets |
|
|
121,937 |
|
|
|
89,457 |
|
Noncurrent marketable securities |
|
|
1,236,350 |
|
|
|
1,268,698 |
|
Deferred income tax assets |
|
|
390,105 |
|
|
|
260,205 |
|
Noncurrent deferred costs |
|
|
10,393 |
|
|
|
12,361 |
|
Goodwill |
|
|
540,740 |
|
|
|
575,080 |
|
Other intangible assets, net |
|
|
179,890 |
|
|
|
215,993 |
|
Other noncurrent assets |
|
|
79,811 |
|
|
|
103,383 |
|
Total assets |
|
$ |
7,627,606 |
|
|
$ |
7,854,427 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
268,674 |
|
|
$ |
370,048 |
|
Salaries and benefits payable |
|
|
184,802 |
|
|
|
211,371 |
|
Accrued warranty costs |
|
|
39,925 |
|
|
|
45,467 |
|
Accrued sales program costs |
|
|
75,182 |
|
|
|
121,514 |
|
Other accrued expenses |
|
|
195,117 |
|
|
|
225,988 |
|
Deferred revenue |
|
|
88,563 |
|
|
|
87,654 |
|
Income taxes payable |
|
|
169,665 |
|
|
|
128,083 |
|
Dividend payable |
|
|
420,995 |
|
|
|
258,023 |
|
Total current liabilities |
|
|
1,442,923 |
|
|
|
1,448,148 |
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities |
|
|
117,941 |
|
|
|
117,595 |
|
Noncurrent income taxes payable |
|
|
50,943 |
|
|
|
62,539 |
|
Noncurrent deferred revenue |
|
|
37,068 |
|
|
|
41,618 |
|
Noncurrent operating lease liabilities |
|
|
100,181 |
|
|
|
70,044 |
|
Other noncurrent liabilities |
|
|
361 |
|
|
|
324 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 192,180 shares outstanding at September 24, 2022 and 192,608 shares outstanding at December 25, 2021 |
|
|
17,979 |
|
|
|
17,979 |
|
Additional paid-in capital |
|
|
2,027,019 |
|
|
|
1,960,722 |
|
Treasury stock (5,897 and 5,469 shares, respectively) |
|
|
(398,974 |
) |
|
|
(303,114 |
) |
Retained earnings |
|
|
4,439,004 |
|
|
|
4,320,737 |
|
Accumulated other comprehensive (loss) income |
|
|
(206,839 |
) |
|
|
117,835 |
|
Total stockholders’ equity |
|
|
5,878,189 |
|
|
|
6,114,159 |
|
Total liabilities and stockholders’ equity |
|
$ |
7,627,606 |
|
|
$ |
7,854,427 |
|
Garmin Ltd. and Subsidiaries |
|
|||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|
|||||||
(In thousands) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
39-Weeks Ended |
|
|||||
|
|
September 24, 2022 |
|
|
September 25, 2021 |
|
||
Operating Activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
680,313 |
|
|
$ |
796,064 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
88,005 |
|
|
|
75,272 |
|
Amortization |
|
|
34,349 |
|
|
|
38,485 |
|
(Gain) loss on sale or disposal of property and equipment |
|
|
(1,652 |
) |
|
|
246 |
|
Unrealized foreign currency losses |
|
|
45,498 |
|
|
|
24,390 |
|
Deferred income taxes |
|
|
(101,133 |
) |
|
|
8,358 |
|
Stock compensation expense |
|
|
57,871 |
|
|
|
68,656 |
|
Realized loss (gain) on marketable securities |
|
|
982 |
|
|
|
(513 |
) |
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable, net of allowance for doubtful accounts |
|
|
156,666 |
|
|
|
197,024 |
|
Inventories |
|
|
(442,312 |
) |
|
|
(357,387 |
) |
Other current and noncurrent assets |
|
|
29,299 |
|
|
|
(31,398 |
) |
Accounts payable |
|
|
(64,199 |
) |
|
|
57,602 |
|
Other current and noncurrent liabilities |
|
|
(84,287 |
) |
|
|
(39,941 |
) |
Deferred revenue |
|
|
(3,299 |
) |
|
|
(6,914 |
) |
Deferred costs |
|
|
3,426 |
|
|
|
7,547 |
|
Income taxes |
|
|
20,067 |
|
|
|
5,974 |
|
Net cash provided by operating activities |
|
|
419,594 |
|
|
|
843,465 |
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(184,928 |
) |
|
|
(187,960 |
) |
Proceeds from sale of property and equipment |
|
|
1,693 |
|
|
|
26 |
|
Purchase of intangible assets |
|
|
(1,411 |
) |
|
|
(1,408 |
) |
Purchase of marketable securities |
|
|
(1,044,942 |
) |
|
|
(1,081,789 |
) |
Redemption of marketable securities |
|
|
923,894 |
|
|
|
975,318 |
|
Acquisitions, net of cash acquired |
|
|
(13,455 |
) |
|
|
(15,893 |
) |
Net cash used in investing activities |
|
|
(319,149 |
) |
|
|
(311,706 |
) |
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
Dividends |
|
|
(399,074 |
) |
|
|
(362,602 |
) |
Proceeds from issuance of treasury stock related to equity awards |
|
|
41,052 |
|
|
|
35,733 |
|
Purchase of treasury stock related to equity awards |
|
|
(14,750 |
) |
|
|
(17,636 |
) |
Purchase of treasury stock under share repurchase plan |
|
|
(105,206 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(477,978 |
) |
|
|
(344,505 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(38,265 |
) |
|
|
(6,172 |
) |
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash, cash equivalents, and restricted cash |
|
|
(415,798 |
) |
|
|
181,082 |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
1,498,843 |
|
|
|
1,458,748 |
|
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
1,083,045 |
|
|
$ |
1,639,830 |
|
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 September 24, 2022 |
|
|||||||||||||||||||||||||||||||
Net sales |
|
$ |
279,875 |
|
|
$ |
340,388 |
|
|
$ |
188,043 |
|
|
$ |
196,506 |
|
|
$ |
135,622 |
|
|
$ |
66,444 |
|
|
$ |
69,178 |
|
|
$ |
1,140,434 |
|
Gross profit |
|
|
147,716 |
|
|
|
219,980 |
|
|
|
137,732 |
|
|
|
110,747 |
|
|
|
54,324 |
|
|
|
30,432 |
|
|
|
23,892 |
|
|
|
670,499 |
|
Operating income (loss) |
|
|
40,850 |
|
|
|
120,842 |
|
|
|
48,487 |
|
|
|
44,950 |
|
|
|
(15,756 |
) |
|
|
2,105 |
|
|
|
(17,861 |
) |
|
|
239,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks Ended September 25, 2021 |
|
|||||||||||||||||||||||||||||||
Net sales |
|
$ |
342,316 |
|
|
$ |
323,856 |
|
|
$ |
180,165 |
|
|
$ |
207,534 |
|
|
$ |
138,102 |
|
|
$ |
82,914 |
|
|
$ |
55,188 |
|
|
$ |
1,191,973 |
|
Gross profit |
|
|
183,028 |
|
|
|
210,522 |
|
|
|
131,260 |
|
|
|
116,152 |
|
|
|
54,985 |
|
|
|
39,342 |
|
|
|
15,643 |
|
|
|
695,947 |
|
Operating income (loss) |
|
|
74,469 |
|
|
|
122,875 |
|
|
|
51,747 |
|
|
|
55,142 |
|
|
|
(21,563 |
) |
|
|
11,979 |
|
|
|
(33,542 |
) |
|
|
282,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39-Weeks Ended September 24, 2022 |
|
|||||||||||||||||||||||||||||||
Net sales |
|
$ |
772,867 |
|
|
$ |
1,106,908 |
|
|
$ |
567,548 |
|
|
$ |
693,369 |
|
|
$ |
413,239 |
|
|
$ |
211,902 |
|
|
$ |
201,337 |
|
|
$ |
3,553,931 |
|
Gross profit |
|
|
387,921 |
|
|
|
720,731 |
|
|
|
413,206 |
|
|
|
376,734 |
|
|
|
163,213 |
|
|
|
98,645 |
|
|
|
64,568 |
|
|
|
2,061,805 |
|
Operating income (loss) |
|
|
64,894 |
|
|
|
424,071 |
|
|
|
150,359 |
|
|
|
172,451 |
|
|
|
(51,104 |
) |
|
|
15,058 |
|
|
|
(66,162 |
) |
|
|
760,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39-Weeks Ended September 25, 2021 |
|
|||||||||||||||||||||||||||||||
Net sales |
|
$ |
1,063,642 |
|
|
$ |
903,715 |
|
|
$ |
534,886 |
|
|
$ |
678,698 |
|
|
$ |
410,265 |
|
|
$ |
231,587 |
|
|
$ |
178,678 |
|
|
$ |
3,591,206 |
|
Gross profit |
|
|
581,765 |
|
|
|
590,355 |
|
|
|
389,376 |
|
|
|
390,141 |
|
|
|
166,717 |
|
|
|
113,567 |
|
|
|
53,150 |
|
|
|
2,118,354 |
|
Operating income (loss) |
|
|
258,884 |
|
|
|
335,728 |
|
|
|
147,888 |
|
|
|
209,140 |
|
|
|
(48,140 |
) |
|
|
37,371 |
|
|
|
(85,511 |
) |
|
|
903,500 |
|
Garmin Ltd. and Subsidiaries |
|
|||||||||||||||||||||||
Net Sales by Geography (Unaudited) |
|
|||||||||||||||||||||||
(In thousands) |
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks Ended |
|
|
39-Weeks Ended |
|
||||||||||||||||||
|
|
September 24, |
|
|
September 25, |
|
|
YoY |
|
|
September 24, |
|
|
September 25, |
|
|
YoY |
|
||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||
Net sales |
|
$ |
1,140,434 |
|
|
$ |
1,191,973 |
|
|
(4)% |
|
|
$ |
3,553,931 |
|
|
$ |
3,591,206 |
|
|
(1)% |
|
||
Americas |
|
|
563,310 |
|
|
|
573,331 |
|
|
(2)% |
|
|
|
1,780,117 |
|
|
|
1,723,415 |
|
|
3% |
|
||
EMEA |
|
|
382,865 |
|
|
|
442,622 |
|
|
(14)% |
|
|
|
1,192,893 |
|
|
|
1,330,855 |
|
|
(10)% |
|
||
APAC |
|
|
194,259 |
|
|
|
176,020 |
|
|
10% |
|
|
|
580,921 |
|
|
|
536,936 |
|
|
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. In the first three quarters 2022 and 2021 there were no such discrete tax items identified.
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.
(In thousands, except per share information) |
|
13-Weeks Ended |
|
|
39-Weeks Ended |
|
||||||||||
|
|
September 24, |
|
|
September 25, |
|
|
September 24, |
|
|
September 25, |
|
||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
GAAP net income |
|
$ |
210,848 |
|
|
$ |
259,039 |
|
|
$ |
680,313 |
|
|
$ |
796,064 |
|
Foreign currency losses(1) |
|
|
29,863 |
|
|
|
15,014 |
|
|
|
55,809 |
|
|
|
30,621 |
|
Tax effect of foreign currency losses(2) |
|
|
(1,277 |
) |
|
|
(891 |
) |
|
|
(4,159 |
) |
|
|
(3,475 |
) |
Pro forma net income |
|
$ |
239,434 |
|
|
$ |
273,162 |
|
|
$ |
731,963 |
|
|
$ |
823,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.09 |
|
|
$ |
1.35 |
|
|
$ |
3.53 |
|
|
$ |
4.14 |
|
Diluted |
|
$ |
1.09 |
|
|
$ |
1.34 |
|
|
$ |
3.52 |
|
|
$ |
4.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.24 |
|
|
$ |
1.42 |
|
|
$ |
3.79 |
|
|
$ |
4.28 |
|
Diluted |
|
$ |
1.24 |
|
|
$ |
1.41 |
|
|
$ |
3.79 |
|
|
$ |
4.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
192,672 |
|
|
|
192,322 |
|
|
|
192,878 |
|
|
|
192,123 |
|
Diluted |
|
|
193,105 |
|
|
|
193,185 |
|
|
|
193,378 |
|
|
|
192,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 losses was calculated using the effective tax rates of 4.3% and 7.5% for the 13-weeks and 39-weeks ended September 24, 2022, respectively and 5.9% and 11.3% for the 13-weeks and 39-weeks ended September 25, 2021, respectively. |
|
|||||||||||||||
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.
(In thousands) |
|
13-Weeks Ended |
|
|
39-Weeks Ended |
|
||||||||||
|
|
September 24, |
|
|
September 25, |
|
|
September 24, |
|
|
September 25, |
|
||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Net cash provided by operating activities |
|
$ |
154,118 |
|
|
$ |
245,423 |
|
|
$ |
419,594 |
|
|
$ |
843,465 |
|
Less: purchases of property and equipment |
|
|
(50,130 |
) |
|
|
(41,418 |
) |
|
|
(184,928 |
) |
|
|
(187,960 |
) |
Free Cash Flow |
|
$ |
103,988 |
|
|
$ |
204,005 |
|
|
$ |
234,666 |
|
|
$ |
655,505 |
|
Forward-looking Financial Measures
The forward-looking financial measures in our 2022 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 $0.27 per share for the 39-weeks ended September 24, 2022.
At this time, management is unable to determine whether or not significant discrete tax items will occur in fiscal 2022 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.
