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)
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(I.R.S. Employer |
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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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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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:
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Name of each exchange on which registered |
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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 28, 2020, Garmin Ltd. (“the Company”) issued a press release announcing its financial results for the fiscal third quarter ended September 26, 2020. 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.
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Exhibit No. |
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Description |
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99.1 |
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104 |
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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.
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GARMIN LTD. |
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October 28, 2020 |
/s/ Andrew R. Etkind |
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Andrew R. Etkind |
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Vice President, General Counsel and Corporate Secretary |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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104 |
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The cover page from this Current Report on Form 8-K, formatted in Inline XBRL (included as Exhibit 101) |
3
EXHIBIT 99.1
Garmin reports record third quarter operating results; issues fiscal 2020 guidance
Schaffhausen, Switzerland / October 28, 2020/ Business Wire
Garmin Ltd. (Nasdaq: GRMN – News) today announced results for the third quarter ended September 26.
Highlights for third quarter 2020 include:
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Total revenue of over $1.1 billion, a 19% year-over-year increase, led by robust growth in marine, fitness and outdoor |
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Gross margin and operating margin were 60.2% and 28.6%, respectively |
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Operating income of $317 million, increasing 21% over the prior year quarter |
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GAAP diluted EPS was $1.63 and pro forma diluted EPS(1) was $1.58, increasing 24% over the prior year quarter |
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Named Manufacturer of the Year by the National Marine Electronics Association for the sixth consecutive year |
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Since its launch in 2011, Garmin inReach® has provided remote communication and rescue facilitation in over 5,000 SOS incidents, demonstrating the crucial importance of satellite based two-way messaging wherever our customers need assistance |
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Began production shipments of the BMW MGU 2020 computing module, expanding our role as a tier-one supplier for BMW automobiles |
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Launched the Garmin CatalystTM, an industry-first coaching tool to optimize motorsports driving performance |
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Garmin Autoland has achieved Federal Aviation Administration (FAA) certification in a total of three aircraft to-date with the latest being the Cirrus Vision Jet, the first jet aircraft to be certified with this game-changing safety technology |
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(in thousands, except per share data) |
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13-Weeks Ended |
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39-Weeks Ended |
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September 26, |
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September 28, |
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YoY |
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September 26, |
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September 28, |
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YoY |
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2020 |
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2019 |
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Change |
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2020 |
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2019 |
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Change |
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Net sales |
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$ |
1,109,194 |
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$ |
934,383 |
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19% |
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$ |
2,835,168 |
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$ |
2,655,273 |
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7% |
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Marine |
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165,437 |
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107,694 |
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54% |
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486,269 |
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393,070 |
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24% |
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Fitness |
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328,446 |
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243,099 |
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35% |
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846,688 |
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675,007 |
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25% |
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Outdoor |
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334,844 |
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258,294 |
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30% |
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716,146 |
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622,748 |
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15% |
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Auto |
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129,355 |
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137,722 |
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(6)% |
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320,215 |
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422,132 |
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(24)% |
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Aviation |
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151,112 |
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187,574 |
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(19)% |
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465,850 |
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542,316 |
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(14)% |
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Gross margin % |
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60.2% |
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60.7% |
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59.6% |
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60.1% |
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Operating income % |
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28.6% |
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28.0% |
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24.1% |
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25.2% |
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GAAP diluted EPS |
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$ |
1.63 |
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$ |
1.19 |
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37% |
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$ |
3.44 |
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$ |
3.10 |
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11% |
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Pro forma diluted EPS(1) |
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$ |
1.58 |
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$ |
1.27 |
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24% |
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$ |
3.41 |
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$ |
3.16 |
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8% |
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(1) See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including pro forma diluted EPS |
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Executive Overview from Cliff Pemble, President and Chief Executive Officer:
“Demand for active lifestyle products fueled strong revenue growth resulting in record revenue and profits for the quarter,” said Cliff Pemble, President and CEO of Garmin. “Interest in our products remains high as we move into the important holiday selling season, and we are prepared with a strong lineup of products that offer the innovation and uniqueness that consumers want.”
Revenue from the marine segment grew 54% in the third quarter across multiple categories led by chartplotters. Gross margin and operating margin were 61% and 31%, respectively, resulting in 152% operating income growth. For the sixth consecutive year, Garmin was recognized as the Manufacturer of the Year by the National Marine Electronics Association (NMEA) and was also awarded four Product of Excellence awards. We launched the new OnDeckTM system, Garmin’s first remote connectivity solution for boaters to track, monitor, and remotely control switches on their vessel from virtually anywhere. We also refreshed our FantomTM solid-state marine radar offering industry leading power in the solid-state RADAR market.
Fitness:
Revenue from the fitness segment grew 35% in the third quarter driven by strong demand for our advanced wearables and cycling products. Gross margin and operating margin were 54% and 27%, respectively, resulting in 75% operating income growth. We launched the new Forerunner® 745, adding daily suggested workouts helping competitors reach their goals, and the Garmin ClipboardTM app that offers an integrated solution for coaches to manage team training and performance. We also launched the Venu® Sq, an entry- level smart watch with GPS capability that combines daily style with industry-leading health monitoring.
Revenue from the outdoor segment grew 30% in the third quarter across all categories led by strong demand for our adventure watches. Gross margin and operating margin were 67% and 44%, respectively, resulting in 40% operating income growth. We recently refreshed the popular Montana® series, combining the flexibility of on or off-road navigation with global messaging and SOS alerts via inReach® satellite technology.
Revenue from the auto segment declined 6% during the third quarter as declines in personal navigation devices were partially offset by growth in specialty categories and new OEM programs. Gross and operating margins were 45% and 3%, respectively. We launched Garmin Catalyst, a new product category and an industry-first real-time coaching tool to help drivers achieve their full potential on the track. We began production shipments of the BMW MGU 2020 computing module expanding our role as a tier-one supplier for BMW automobiles. In addition, we began shipments of a complete infotainment solution for the Daimler Vito vehicle.
Aviation:
Revenue from the aviation segment declined 19% in the third quarter due to fewer shipments to OEM customers and reduced contributions from ADS-B products. Gross margin and operating margin were 71% and 19%, respectively. During the quarter, Autoland achieved FAA certification on the Cirrus Vision Jet, becoming the first jet aircraft to incorporate Autoland technology. This latest certification brings the Autoland equipped aircraft to three models including the previously certified Piper M600 and Daher TBM 940.
Additional Financial Information:
Total operating expenses in the third quarter were $351 million, a 15% increase over the prior year. Research and development increased by 18%, primarily due to engineering personnel costs. Selling, general and administrative expenses increased 14%, driven primarily by information technology costs and personnel related expenses. Advertising increased 4%, driven primarily by higher spend in the outdoor segment.
The effective tax rate in the third quarter of 2020 was 6.9% compared to 11.6% in the prior year quarter. The decrease in the effective tax rate is primarily due to the migration of intellectual property ownership from Switzerland to the United States.
In the third quarter of 2020, we generated approximately $236 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 $2.7 billion.
(1) See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including free cash flow.
We expect full year 2020 revenue of approximately $4.0 billion with growth in the marine, fitness, and outdoor segments partially offset by declines in the auto and aviation segments. We expect our full year pro forma EPS to be approximately $4.70 based upon gross margin of approximately 59.0%, operating margin of approximately 24.0% and a full year pro forma effective tax rate of approximately 10.0%.
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2020 Guidance |
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Segment |
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2020 Revenue Growth Estimates |
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Revenue |
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~$4.0B |
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Marine |
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~25% |
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Gross Margin |
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~59.0% |
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Fitness |
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~20% |
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Operating Margin |
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~24.0% |
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Outdoor |
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~15% |
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Tax Rate |
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~10.0% |
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Aviation |
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~(17%) |
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EPS |
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~$4.70 |
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Auto |
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~(20%) |
(2) See attached discussion on Forward-looking Financial Measures
Webcast Information/Forward-Looking Statements:
The information for Garmin Ltd.’s earnings call is as follows:
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When: |
Wednesday, October 28, 2020 at 10:30 a.m. Eastern |
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Where: |
https://www.garmin.com/en-US/investors/events/ |
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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 October 28, 2021 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 2020 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 to be introduced, 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 both the Annual Report on Form 10-K for the year ended December 28, 2019 and the Quarterly Report on Form 10-Q for the quarter ended September 26, 2020 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2019 Form 10-K and the Q3 2020 Form 10-Q 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 October 28, 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 and the Garmin delta, Forerunner, Venu, inReach and Montana are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Garmin Catalyst, Fantom, Garmin OnDeck, and Panoptix, 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
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Investor Relations Contact: |
Media Relations Contact: |
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Teri Seck |
Carly Hysell |
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913/397-8200 |
913/397-8200 |
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Garmin Ltd. And Subsidiaries |
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(In thousands, except per share information) |
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13-Weeks Ended |
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39-Weeks Ended |
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September 26, |
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September 28, |
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September 26, |
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September 28, |
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2020 |
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2019 |
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2020 |
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2019 |
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Net sales |
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$ |
1,109,194 |
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$ |
934,383 |
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$ |
2,835,168 |
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$ |
2,655,273 |
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Cost of goods sold |
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441,211 |
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366,925 |
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1,144,816 |
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1,060,752 |
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Gross profit |
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667,983 |
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567,458 |
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1,690,352 |
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1,594,521 |
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Advertising expense |
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33,866 |
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32,668 |
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90,031 |
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101,808 |
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Selling, general and administrative expense |
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142,134 |
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124,769 |
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411,335 |
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380,289 |
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Research and development expense |
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174,882 |
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148,561 |
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506,013 |
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443,361 |
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Total operating expense |
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350,882 |
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305,998 |
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1,007,379 |
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925,458 |
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Operating income |
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317,101 |
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261,460 |
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682,973 |
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669,063 |
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Other income (expense): |
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Interest income |
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7,777 |
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12,309 |
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30,258 |
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39,748 |
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Foreign currency gains (losses) |
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10,113 |
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(16,296 |
) |
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(9,802 |
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(12,568 |
) |
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Other income (expense) |
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1,726 |
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294 |
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8,515 |
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3,567 |
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Total other income (expense) |
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19,616 |
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(3,693 |
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28,971 |
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30,747 |
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Income before income taxes |
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336,717 |
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257,767 |
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711,944 |
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699,810 |
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Income tax provision |
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23,300 |
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29,901 |
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53,168 |
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108,115 |
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Net income |
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$ |
313,417 |
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$ |
227,866 |
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$ |
658,776 |
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$ |
591,695 |
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Net income per share: |
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Basic |
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$ |
1.64 |
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$ |
1.20 |
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$ |
3.45 |
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$ |
3.12 |
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Diluted |
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$ |
1.63 |
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$ |
1.19 |
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$ |
3.44 |
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$ |
3.10 |
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Weighted average common shares outstanding: |
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Basic |
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191,234 |
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190,102 |
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191,021 |
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189,853 |
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Diluted |
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191,998 |
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190,962 |
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191,760 |
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190,790 |
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Garmin Ltd. And Subsidiaries |
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Condensed Consolidated Balance Sheets (Unaudited) |
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(In thousands, except per share information) |
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September 26, 2020 |
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December 28, 2019 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
1,223,516 |
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$ |
1,027,567 |
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Marketable securities |
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430,164 |
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376,463 |
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Accounts receivable, net |
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658,000 |
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706,763 |
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Inventories |
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821,377 |
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752,908 |
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Deferred costs |
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21,067 |
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25,105 |
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Prepaid expenses and other current assets |
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187,746 |
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169,044 |
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Total current assets |
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3,341,870 |
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3,057,850 |
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Property and equipment, net |
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813,561 |
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728,921 |
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Operating lease right-of-use assets |
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74,949 |
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63,589 |
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Restricted cash |
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293 |
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|
71 |
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Marketable securities |
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1,058,103 |
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1,205,475 |
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Deferred income taxes |
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|
247,502 |
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|
268,518 |
|
|
Noncurrent deferred costs |
|
|
17,676 |
|
|
|
23,493 |
|
|
Intangible assets, net |
|
|
818,781 |
|
|
|
659,629 |
|
|
Other assets |
|
|
177,934 |
|
|
|
159,253 |
|
|
Total assets |
|
$ |
6,550,669 |
|
|
$ |
6,166,799 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
235,467 |
|
|
$ |
240,831 |
|
|
Salaries and benefits payable |
|
|
137,859 |
|
|
|
128,426 |
|
|
Accrued warranty costs |
|
|
40,002 |
|
|
|
39,758 |
|
|
Accrued sales program costs |
|
|
76,255 |
|
|
|
112,578 |
|
|
Deferred revenue |
|
|
88,042 |
|
|
|
94,562 |
|
|
Accrued royalty costs |
|
|
15,389 |
|
|
|
15,401 |
|
|
Accrued advertising expense |
|
|
25,905 |
|
|
|
35,142 |
|
|
Other accrued expenses |
|
|
105,731 |
|
|
|
95,060 |
|
|
Income taxes payable |
|
|
48,342 |
|
|
|
56,913 |
|
|
Dividend payable |
|
|
349,964 |
|
|
|
217,262 |
|
|
Total current liabilities |
|
|
1,122,956 |
|
|
|
1,035,933 |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
124,746 |
|
|
|
114,754 |
|
|
Noncurrent income taxes |
|
|
75,186 |
|
|
|
105,771 |
|
|
Noncurrent deferred revenue |
|
|
52,715 |
|
|
|
67,329 |
|
|
Noncurrent operating lease liabilities |
|
|
58,416 |
|
|
|
49,238 |
|
|
Other liabilities |
|
|
12,309 |
|
|
|
278 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 191,237 shares outstanding at September 26, 2020 and 190,686 shares outstanding at December 28, 2019 |
|
|
17,979 |
|
|
|
17,979 |
|
|
Additional paid-in capital |
|
|
1,872,519 |
|
|
|
1,835,622 |
|
|
Treasury stock |
|
|
(326,294 |
) |
|
|
(345,040 |
) |
|
Retained earnings |
|
|
3,421,159 |
|
|
|
3,229,061 |
|
|
Accumulated other comprehensive income |
|
|
118,978 |
|
|
|
55,874 |
|
|
Total stockholders’ equity |
|
|
5,104,341 |
|
|
|
4,793,496 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
6,550,669 |
|
|
$ |
6,166,799 |
|
|
Garmin Ltd. And Subsidiaries |
|
|||||||
|
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|
|||||||
|
(In thousands) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
39-Weeks Ended |
|
|||||
|
|
|
September 26, 2020 |
|
|
September 28, 2019 |
|
||
|
Operating Activities: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
658,776 |
|
|
$ |
591,695 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
57,141 |
|
|
|
52,503 |
|
|
Amortization |
|
|
32,969 |
|
|
|
25,112 |
|
|
Gain on sale of property and equipment |
|
|
(1,815 |
) |
|
|
(5 |
) |
|
Unrealized foreign currency losses |
|
|
4,384 |
|
|
|
14,653 |
|
|
Deferred income taxes |
|
|
14,353 |
|
|
|
18,012 |
|
|
Stock compensation expense |
|
|
53,515 |
|
|
|
47,553 |
|
|
Realized gain on marketable securities |
|
|
(1,316 |
) |
|
|
(213 |
) |
|
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
|
Accounts receivable, net of allowance for doubtful accounts |
|
|
59,474 |
|
|
|
15,244 |
|
|
Inventories |
|
|
(56,063 |
) |
|
|
(178,121 |
) |
|
Other current and non-current assets |
|
|
(27,019 |
) |
|
|
(86,538 |
) |
|
Accounts payable |
|
|
(11,939 |
) |
|
|
27,523 |
|
|
Other current and non-current liabilities |
|
|
(18,299 |
) |
|
|
(54,401 |
) |
|
Deferred revenue |
|
|
(21,148 |
) |
|
|
(7,750 |
) |
|
Deferred costs |
|
|
9,855 |
|
|
|
6,326 |
|
|
Income taxes payable |
|
|
(53,419 |
) |
|
|
(7,423 |
) |
|
Net cash provided by operating activities |
|
|
699,449 |
|
|
|
464,170 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(137,072 |
) |
|
|
(91,469 |
) |
|
Proceeds from sale of property and equipment |
|
|
1,965 |
|
|
|
370 |
|
|
Purchase of intangible assets |
|
|
(1,643 |
) |
|
|
(1,862 |
) |
|
Purchase of marketable securities |
|
|
(702,487 |
) |
|
|
(333,320 |
) |
|
Redemption of marketable securities |
|
|
808,554 |
|
|
|
333,783 |
|
|
Acquisitions, net of cash acquired |
|
|
(148,648 |
) |
|
|
(275,310 |
) |
|
Net cash used in investing activities |
|
|
(179,331 |
) |
|
|
(367,808 |
) |
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
Dividends |
|
|
(333,975 |
) |
|
|
(308,905 |
) |
|
Proceeds from issuance of treasury stock related to equity awards |
|
|
15,202 |
|
|
|
12,982 |
|
|
Purchase of treasury stock related to equity awards |
|
|
(13,074 |
) |
|
|
(12,972 |
) |
|
Net cash used in financing activities |
|
|
(331,847 |
) |
|
|
(308,895 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
7,900 |
|
|
|
(11,834 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
|
196,171 |
|
|
|
(224,367 |
) |
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
1,027,638 |
|
|
|
1,201,805 |
|
|
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
1,223,809 |
|
|
$ |
977,438 |
|
|
Garmin Ltd. And Subsidiaries |
|
|||||||||||||||||||||||
|
Net Sales, Gross Profit and Operating Income by Segment (Unaudited) |
|
|||||||||||||||||||||||
|
(In thousands) |
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable Segments |
|
|||||||||||||||||||||
|
|
|
Marine |
|
|
Fitness |
|
|
Outdoor |
|
|
Auto |
|
|
Aviation |
|
|
Total |
|
||||||
|
13-Weeks Ended September 26, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
165,437 |
|
|
$ |
328,446 |
|
|
$ |
334,844 |
|
|
$ |
129,355 |
|
|
$ |
151,112 |
|
|
$ |
1,109,194 |
|
|
Gross profit |
|
|
100,423 |
|
|
|
177,794 |
|
|
|
223,704 |
|
|
|
58,135 |
|
|
|
107,927 |
|
|
|
667,983 |
|
|
Operating income |
|
|
50,482 |
|
|
|
87,083 |
|
|
|
147,477 |
|
|
|
3,462 |
|
|
|
28,597 |
|
|
|
317,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks Ended September 28, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
107,694 |
|
|
$ |
243,099 |
|
|
$ |
258,294 |
|
|
$ |
137,722 |
|
|
$ |
187,574 |
|
|
$ |
934,383 |
|
|
Gross profit |
|
|
64,275 |
|
|
|
126,835 |
|
|
|
170,846 |
|
|
|
65,814 |
|
|
|
139,688 |
|
|
|
567,458 |
|
|
Operating income |
|
|
20,008 |
|
|
|
49,831 |
|
|
|
105,051 |
|
|
|
20,857 |
|
|
|
65,713 |
|
|
|
261,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39-Weeks Ended September 26, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
486,269 |
|
|
$ |
846,688 |
|
|
$ |
716,146 |
|
|
$ |
320,215 |
|
|
$ |
465,850 |
|
|
$ |
2,835,168 |
|
|
Gross profit |
|
|
288,103 |
|
|
|
446,936 |
|
|
|
469,150 |
|
|
|
147,393 |
|
|
|
338,770 |
|
|
|
1,690,352 |
|
|
Operating income |
|
|
134,195 |
|
|
|
190,075 |
|
|
|
262,057 |
|
|
|
(6,837 |
) |
|
|
103,483 |
|
|
|
682,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39-Weeks Ended September 28, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
393,070 |
|
|
$ |
675,007 |
|
|
$ |
622,748 |
|
|
$ |
422,132 |
|
|
$ |
542,316 |
|
|
$ |
2,655,273 |
|
|
Gross profit |
|
|
234,014 |
|
|
|
352,805 |
|
|
|
403,842 |
|
|
|
198,012 |
|
|
|
405,848 |
|
|
|
1,594,521 |
|
|
Operating income |
|
|
88,212 |
|
|
|
118,369 |
|
|
|
218,340 |
|
|
|
53,978 |
|
|
|
190,164 |
|
|
|
669,063 |
|
|
Garmin Ltd. And Subsidiaries |
|
|||||||||||||||||||||||
|
Net Sales by Geography (Unaudited) |
|
|||||||||||||||||||||||
|
(In thousands) |
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks Ended |
|
|
39-Weeks Ended |
|
||||||||||||||||||
|
|
|
September 26, |
|
|
September 28, |
|
|
YoY |
|
|
September 26, |
|
|
September 28, |
|
|
YoY |
|
||||||
|
|
|
2020 |
|
|
2019 |
|
|
Change |
|
|
2020 |
|
|
2019 |
|
|
Change |
|
||||||
|
Net sales |
|
$ |
1,109,194 |
|
|
$ |
934,383 |
|
|
19% |
|
|
$ |
2,835,168 |
|
|
$ |
2,655,273 |
|
|
7% |
|
||
|
Americas |
|
|
521,869 |
|
|
|
439,113 |
|
|
19% |
|
|
|
1,372,360 |
|
|
|
1,289,409 |
|
|
6% |
|
||
|
EMEA |
|
|
407,859 |
|
|
|
344,010 |
|
|
19% |
|
|
|
1,042,928 |
|
|
|
942,625 |
|
|
11% |
|
||
|
APAC |
|
|
179,466 |
|
|
|
151,260 |
|
|
19% |
|
|
|
419,880 |
|
|
|
423,239 |
|
|
(1)% |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 net income (earnings) per share, pro forma effective tax rate 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 39 weeks of 2019, there were no such discrete tax items identified.
|
Garmin Ltd. And Subsidiaries |
|
|||||||||||||||
|
Pro Forma Effective Tax Rate |
|
|||||||||||||||
|
(In thousands, except effective tax rate (ETR) information) |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks Ended |
|
|
39-Weeks Ended |
|
||||||||||
|
|
|
September 26, |
|
|
September 26, |
|
||||||||||
|
|
|
2020 |
|
|
2020 |
|
||||||||||
|
|
|
$ |
|
|
ETR(1) |
|
|
$ |
|
|
ETR(1) |
|
||||
|
U.S GAAP income tax provision |
|
$ |
23,300 |
|
|
|
6.9 |
% |
|
$ |
53,168 |
|
|
|
7.5 |
% |
|
Pro forma discrete tax item: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Uncertain Tax Reserve Release(2) |
|
|
|
|
|
|
|
|
|
|
14,308 |
|
|
|
|
|
|
Pro forma income tax provision |
|
$ |
23,300 |
|
|
|
6.9 |
% |
|
$ |
67,476 |
|
|
|
9.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 second quarter 2020 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. |
|
|||||||||||||||
The net release of other uncertain tax position reserves, amounting to approximately $22.9 million and $23.3 million in the 39 weeks ended September 26, 2020 and September 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 |
|
|
39-Weeks Ended |
|
||||||||||
|
|
|
September 26, |
|
|
September 28, |
|
|
September 26, |
|
|
September 28, |
|
||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
GAAP net income |
|
$ |
313,417 |
|
|
$ |
227,866 |
|
|
$ |
658,776 |
|
|
$ |
591,695 |
|
|
Foreign currency gains / losses(1) |
|
|
(10,113 |
) |
|
|
16,296 |
|
|
|
9,802 |
|
|
|
12,568 |
|
|
Tax effect of foreign currency gains / losses(2) |
|
|
700 |
|
|
|
(1,890 |
) |
|
|
(929 |
) |
|
|
(1,942 |
) |
|
Pro forma discrete tax item(3) |
|
|
— |
|
|
|
— |
|
|
|
(14,308 |
) |
|
|
— |
|
|
Pro forma net income |
|
$ |
304,004 |
|
|
$ |
242,272 |
|
|
$ |
653,341 |
|
|
$ |
602,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.64 |
|
|
$ |
1.20 |
|
|
$ |
3.45 |
|
|
$ |
3.12 |
|
|
Diluted |
|
$ |
1.63 |
|
|
$ |
1.19 |
|
|
$ |
3.44 |
|
|
$ |
3.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.59 |
|
|
$ |
1.27 |
|
|
$ |
3.42 |
|
|
$ |
3.17 |
|
|
Diluted |
|
$ |
1.58 |
|
|
$ |
1.27 |
|
|
$ |
3.41 |
|
|
$ |
3.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
191,234 |
|
|
|
190,102 |
|
|
|
191,021 |
|
|
|
189,853 |
|
|
Diluted |
|
|
191,998 |
|
|
|
190,962 |
|
|
|
191,760 |
|
|
|
190,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 6.9% and 9.5% for the 13-weeks and 39-weeks ended September 26, 2020, respectively, and an effective tax rate of 11.6% and 15.4% for the 13-weeks and 39-weeks ended September 28, 2019, respectively.
|
|
|||||||||||||||
|
(3) The discrete tax item is discussed in the pro forma effective tax rate section above. |
|
|||||||||||||||
Management believes that free cash flow is an important financial 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 operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. 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 |
|
|
39-Weeks Ended |
|
||||||||||
|
|
|
September 26, |
|
|
September 28, |
|
|
September 26, |
|
|
September 28, |
|
||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Net cash provided by operating activities |
|
$ |
274,339 |
|
|
$ |
188,952 |
|
|
$ |
699,449 |
|
|
$ |
464,170 |
|
|
Less: purchases of property and equipment |
|
|
(38,802 |
) |
|
|
(30,974 |
) |
|
|
(137,072 |
) |
|
|
(91,469 |
) |
|
Free Cash Flow |
|
$ |
235,537 |
|
|
$ |
157,978 |
|
|
$ |
562,377 |
|
|
$ |
372,701 |
|
Forward-looking Financial Measures
The forward-looking financial measures in our 2020 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 $0.05 per share for the 39-weeks ended September 26, 2020.
At this time, management is unable to determine whether or not additional significant discrete tax items will occur in fiscal 2020 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.