Company reports double-digit third quarter
revenue and operating income growth
SCHAFFHAUSEN, Switzerland, Nov. 1, 2023
/PRNewswire/ -- Garmin® Ltd. (NYSE: GRMN), today
announced results for the third quarter ended September 30, 2023.
Highlights for third quarter 2023 include:
- Consolidated revenue of $1.28
billion, a 12% increase compared to the prior year
quarter
- Record third quarter revenue in four of five segments
- Gross margin and operating margin were 57.0%, and 21.2%
- Operating income was $270
million, a 13% increase compared to the prior year
quarter
- GAAP EPS of $1.34 and pro forma
EPS(1) of $1.41,
representing 14% growth in pro forma EPS over the prior year
quarter
- Generated strong operating cash flows of $357 million and free cash flow(1) of
$312 million
- Launched new fitness wearables with robust health and wellness
features
- Ranked #1 in avionics product support for the 20th
consecutive year by Aviation International News
- Named Manufacturer of the Year by the National Marine
Electronics Association (NMEA) for the ninth consecutive year and
received five Product of Excellence Awards
- Completed the strategic acquisition of JL Audio, strengthening
our marine entertainment product portfolio
(In thousands, except
per share information)
|
|
13-Weeks
Ended
|
|
|
39-Weeks
Ended
|
|
|
|
September 30,
|
|
|
September 24,
|
|
|
YoY
|
|
|
September 30,
|
|
|
September 24,
|
|
|
YoY
|
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
Net sales
|
|
$
|
1,277,531
|
|
|
$
|
1,140,434
|
|
|
12 %
|
|
|
$
|
3,745,751
|
|
|
$
|
3,553,931
|
|
|
5 %
|
|
Fitness
|
|
|
352,976
|
|
|
|
279,875
|
|
|
26 %
|
|
|
|
932,561
|
|
|
|
772,867
|
|
|
21 %
|
|
Outdoor
|
|
|
433,997
|
|
|
|
406,832
|
|
|
7 %
|
|
|
|
1,210,773
|
|
|
|
1,318,810
|
|
|
(8) %
|
|
Aviation
|
|
|
198,160
|
|
|
|
188,043
|
|
|
5 %
|
|
|
|
629,195
|
|
|
|
567,548
|
|
|
11 %
|
|
Marine
|
|
|
182,248
|
|
|
|
196,506
|
|
|
(7) %
|
|
|
|
677,026
|
|
|
|
693,369
|
|
|
(2) %
|
|
Auto OEM
|
|
|
110,150
|
|
|
|
69,178
|
|
|
59 %
|
|
|
|
296,196
|
|
|
|
201,337
|
|
|
47 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
%
|
|
|
57.0
|
%
|
|
|
58.8
|
%
|
|
|
|
|
|
57.2 %
|
|
|
58.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
%
|
|
|
21.2
|
%
|
|
|
21.0
|
%
|
|
|
|
|
|
20.1 %
|
|
|
21.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted
EPS
|
|
$
|
1.34
|
|
|
$
|
1.09
|
|
|
23 %
|
|
|
$
|
3.90
|
|
|
$
|
3.52
|
|
|
11 %
|
|
Pro forma diluted
EPS(1)
|
|
$
|
1.41
|
|
|
$
|
1.24
|
|
|
14 %
|
|
|
$
|
3.88
|
|
|
$
|
3.79
|
|
|
2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See attached
Non-GAAP Financial Information for discussion and reconciliation of
non-GAAP financial measures, including pro forma diluted EPS and
free cash flow
|
|
Executive Overview from Cliff
Pemble, President and Chief Executive Officer:
"We delivered outstanding performance in the third quarter with
double-digit percentage growth in revenue, operating income, and
earnings. Looking ahead, we are well positioned for the holiday
selling season with a strong lineup of innovative products which
gives us confidence to raise our outlook for the remainder of the
year." - Cliff Pemble, President and
Chief Executive Officer of Garmin Ltd.
Fitness:
Revenue from the fitness segment grew 26% in the third
quarter with growth across all categories led by strong demand
for wearables. Gross and operating margins were 54% and 21%,
respectively, resulting in $75 million of operating income.
During the quarter, we introduced the new Venu® 3
smartwatch family in two sizes, as well as the value packed
vívoactive® 5 with a bright AMOLED display. We also
recently announced the expansion of our ECG App to additional
smartwatches. This FDA-cleared and clinically-validated app lets
even more Garmin customers record an ECG and check for signs of
atrial fibrillation right from their smartwatch.
Outdoor:
Revenue from the outdoor segment grew 7% in the third
quarter with growth across multiple categories led by
adventure watches. Gross and operating margins were 62% and
31%, respectively, resulting in $136 million of operating
income. During the quarter, we launched the tactix® 7
AMOLED Edition, which expands our offering of wearables with AMOLED
displays. This highly versatile smartwatch includes a night vision
compatible flashlight and up to 31 days of battery life. We
recently announced the MARQ® Carbon collection featuring
a watch case and bezel inlay machined from a uniquely engineered
material called Fused Carbon Fiber™—making it distinctive, strong,
lightweight, and ready for adventure.
Aviation:
Revenue from the aviation segment grew 5% in the third
quarter driven by growth in OEM product categories. Gross and
operating margins were 75% and 25%, respectively, resulting in
$49 million of operating income. During the quarter, we
announced additional certifications for our GFC 500/600 autopilot,
bringing the performance and safety enhancing benefits of our
flight control technology to more aircraft models. We recently
announced a long-term agreement to provide state-of-the-art
G3000® integrated flight decks to BETA Technologies for
its all-electric aircraft.
Marine:
Revenue from the marine segment decreased 7% in the
third quarter with declines across multiple categories partially
offset by contributions from JL Audio. Gross and operating margins
were 52% and 13%, respectively, resulting in $24 million
of operating income. During the quarter, we launched the
GPSMAP® 9000 series in multiple sizes including the
27-inch GPSMAP 9227 that was recognized with an Innovation Award at
the recent International Boatbuilders' Exhibition. We were recently
named Manufacturer of the Year and received five Product of
Excellence Awards from the NMEA, and the Most Innovative Marine
Company by Soundings Trade Only, a leading marine trade
publication.
Auto OEM:
Revenue from the auto OEM segment grew 59% during the
third quarter primarily due to increased shipments of domain
controllers. Gross margin was 21% and the operating loss
narrowed to $14 million in the quarter. During the quarter,
domain controller deliveries continued to ramp up across the BMW
lineup. We also experienced strong growth in the infotainment
category with contributions from Yamaha Motorsports and Honda
motorcycles.
Additional Financial Information:
Total operating expenses in the third quarter were $458 million, a 6% increase over the prior year.
Research and development increased 6% primarily due to engineering
personnel costs. Selling, general and administrative expenses
increased 6% driven primarily by personnel related expenses and
information technology costs. Advertising expenses increased 7%
primarily due to higher cooperative advertising spend.
The effective tax rate in the third quarter was 8.0%.
Excluding $2 million of income tax
expense due to the revaluation of certain deferred tax assets
associated with a state tax rate change, our pro forma effective
tax rate(1) in the third quarter of 2023 was 7.2%
compared to 4.3% in the prior year quarter. The year-over-year
increase in the pro forma effective tax rate is primarily due to
income mix by jurisdiction.
In the third quarter of 2023, we generated strong operating cash
flows of $357 million and free cash
flow(1) of $312 million.
We paid a quarterly dividend of approximately $140 million and repurchased approximately
$9 million of the Company's shares
within the quarter, leaving approximately $18 million remaining as of September 30, 2023, in the share repurchase
program authorized through December 29,
2023. Including the funding of the strategic acquisition of
JL Audio, we ended the quarter with cash and marketable securities
of approximately $2.8 billion.
(1)
|
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.
|
2023 Fiscal Year Guidance:
Based on our performance in the first three quarters of 2023 and
the closing of our acquisition of JL Audio, we are adjusting our
full year guidance. We now anticipate revenue of approximately
$5.150 billion and pro forma EPS of
$5.25 based on gross margin of 56.7%,
operating margin of 19.8% and a full year pro forma effective tax
rate of 8.5%. This expected pro forma EPS of $5.25 includes approximately $0.05 of dilutive impact related to newly
acquired JL Audio (see attached discussion on Forward-looking
Financial Measures).
Dividend:
The board of directors has established December 29, 2023, as the payment date for the
third dividend installment of $0.73
per share with a record date of December 15,
2023. At the 2023 annual shareholders' meeting, Garmin
shareholders, in accordance with Swiss corporate law, approved a
cash dividend in the total amount of $2.92 per share, 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, 2023 and September 29, 2023. The board currently
anticipates the scheduling of the remaining quarterly dividend
installment as follows:
Dividend
Date
|
|
Record Date
|
|
$s per share
|
March 29,
2024
|
|
March 15,
2024
|
|
$0.73
|
Webcast Information/Forward-Looking Statements:
The information for Garmin Ltd.'s earnings call is as
follows:
When:
|
Wednesday, November 1,
2023 at 10:30 a.m. Eastern
|
Where:
|
Join a live stream of
the call at the following link
|
|
https://www.garmin.com/en-US/investors/events/
|
An archive of the live webcast will be available until
November 1, 2024 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 2023 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, 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 31,
2022 filed by Garmin with the Securities and Exchange
Commission (Commission file number 001-41118). A copy of
Garmin's 2022 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 30, 2023. 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, epix, fēnix, Fused
Carbon Fiber, venu, vivoactive, tactix, MARQ, G3000, and
GPSMAP are trademarks of Garmin Ltd. or its subsidiaries and are
registered in one or more countries, including the U.S. 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
|
investor.relations@garmin.com
|
media.relations@garmin.com
|
Garmin Ltd. and
Subsidiaries
|
|
Condensed
Consolidated Statements of Income (Unaudited)
|
|
(In thousands,
except per share information)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended
|
|
|
39-Weeks
Ended
|
|
|
|
September 30,
|
|
|
September 24,
|
|
|
September 30,
|
|
|
September 24,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Net sales
|
|
$
|
1,277,531
|
|
|
$
|
1,140,434
|
|
|
$
|
3,745,751
|
|
|
$
|
3,553,931
|
|
Cost of goods
sold
|
|
|
548,962
|
|
|
|
469,935
|
|
|
|
1,604,945
|
|
|
|
1,492,126
|
|
Gross profit
|
|
|
728,569
|
|
|
|
670,499
|
|
|
|
2,140,806
|
|
|
|
2,061,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
expense
|
|
|
35,158
|
|
|
|
32,888
|
|
|
|
111,849
|
|
|
|
110,378
|
|
Selling, general and
administrative expense
|
|
|
201,470
|
|
|
|
189,546
|
|
|
|
609,800
|
|
|
|
571,541
|
|
Research and
development expense
|
|
|
221,572
|
|
|
|
208,692
|
|
|
|
667,451
|
|
|
|
619,215
|
|
Total operating
expense
|
|
|
458,200
|
|
|
|
431,126
|
|
|
|
1,389,100
|
|
|
|
1,301,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
270,369
|
|
|
|
239,373
|
|
|
|
751,706
|
|
|
|
760,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
19,803
|
|
|
|
10,472
|
|
|
|
54,461
|
|
|
|
26,520
|
|
Foreign currency gains
(losses)
|
|
|
(11,539)
|
|
|
|
(29,863)
|
|
|
|
6,946
|
|
|
|
(55,809)
|
|
Other
income
|
|
|
938
|
|
|
|
285
|
|
|
|
4,206
|
|
|
|
3,716
|
|
Total other income
(expense)
|
|
|
9,202
|
|
|
|
(19,106)
|
|
|
|
65,613
|
|
|
|
(25,573)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
279,571
|
|
|
|
220,267
|
|
|
|
817,319
|
|
|
|
735,098
|
|
Income tax
provision
|
|
|
22,328
|
|
|
|
9,419
|
|
|
|
69,810
|
|
|
|
54,785
|
|
Net income
|
|
$
|
257,243
|
|
|
$
|
210,848
|
|
|
$
|
747,509
|
|
|
$
|
680,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.34
|
|
|
$
|
1.09
|
|
|
$
|
3.91
|
|
|
$
|
3.53
|
|
Diluted
|
|
$
|
1.34
|
|
|
$
|
1.09
|
|
|
$
|
3.90
|
|
|
$
|
3.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191,435
|
|
|
|
192,672
|
|
|
|
191,409
|
|
|
|
192,878
|
|
Diluted
|
|
|
191,868
|
|
|
|
193,105
|
|
|
|
191,772
|
|
|
|
193,378
|
|
Garmin Ltd. and
Subsidiaries
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2023
|
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,422,855
|
|
|
$
|
1,279,194
|
|
Marketable
securities
|
|
|
273,050
|
|
|
|
173,288
|
|
Accounts receivable,
net
|
|
|
721,137
|
|
|
|
656,847
|
|
Inventories
|
|
|
1,439,894
|
|
|
|
1,515,045
|
|
Deferred
costs
|
|
|
15,296
|
|
|
|
14,862
|
|
Prepaid expenses and
other current assets
|
|
|
284,682
|
|
|
|
315,915
|
|
Total current
assets
|
|
|
4,156,914
|
|
|
|
3,955,151
|
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
1,187,375
|
|
|
|
1,147,005
|
|
Operating lease
right-of-use assets
|
|
|
140,635
|
|
|
|
138,040
|
|
Noncurrent marketable
securities
|
|
|
1,081,674
|
|
|
|
1,208,360
|
|
Deferred income tax
assets
|
|
|
514,876
|
|
|
|
441,071
|
|
Noncurrent deferred
costs
|
|
|
10,538
|
|
|
|
9,831
|
|
Goodwill
|
|
|
594,449
|
|
|
|
567,994
|
|
Other intangible
assets, net
|
|
|
185,835
|
|
|
|
178,461
|
|
Other noncurrent
assets
|
|
|
92,726
|
|
|
|
85,257
|
|
Total assets
|
|
$
|
7,965,022
|
|
|
$
|
7,731,170
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
268,030
|
|
|
$
|
212,417
|
|
Salaries and benefits
payable
|
|
|
196,665
|
|
|
|
176,114
|
|
Accrued warranty
costs
|
|
|
53,533
|
|
|
|
50,952
|
|
Accrued sales program
costs
|
|
|
71,558
|
|
|
|
97,772
|
|
Other accrued
expenses
|
|
|
208,717
|
|
|
|
197,376
|
|
Deferred
revenue
|
|
|
98,289
|
|
|
|
91,092
|
|
Income taxes
payable
|
|
|
151,559
|
|
|
|
246,180
|
|
Dividend
payable
|
|
|
279,447
|
|
|
|
139,732
|
|
Total current
liabilities
|
|
|
1,327,798
|
|
|
|
1,211,635
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
|
116,419
|
|
|
|
129,965
|
|
Noncurrent income taxes
payable
|
|
|
24,577
|
|
|
|
34,627
|
|
Noncurrent deferred
revenue
|
|
|
35,525
|
|
|
|
35,702
|
|
Noncurrent operating
lease liabilities
|
|
|
111,035
|
|
|
|
114,541
|
|
Other noncurrent
liabilities
|
|
|
388
|
|
|
|
360
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Shares (195,880 and
198,077 shares authorized and issued;
191,387 and 191,623 shares outstanding)
|
|
|
19,588
|
|
|
|
17,979
|
|
Additional paid-in
capital
|
|
|
2,100,357
|
|
|
|
2,042,472
|
|
Treasury stock (4,493
and 6,454 shares)
|
|
|
(331,393)
|
|
|
|
(475,095)
|
|
Retained
earnings
|
|
|
4,721,555
|
|
|
|
4,733,517
|
|
Accumulated other
comprehensive income (loss)
|
|
|
(160,827)
|
|
|
|
(114,533)
|
|
Total
stockholders' equity
|
|
|
6,349,280
|
|
|
|
6,204,340
|
|
Total liabilities and
stockholders' equity
|
|
$
|
7,965,022
|
|
|
$
|
7,731,170
|
|
Garmin Ltd. and
Subsidiaries
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
39-Weeks
Ended
|
|
|
|
September 30,
2023
|
|
|
September 24,
2022
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
747,509
|
|
|
$
|
680,313
|
|
Adjustments to
reconcile net income to net cash provided by
operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
98,483
|
|
|
|
88,005
|
|
Amortization
|
|
|
33,751
|
|
|
|
34,349
|
|
Gain on sale or
disposal of property and equipment
|
|
|
(50)
|
|
|
|
(1,652)
|
|
Unrealized foreign
currency losses
|
|
|
9,927
|
|
|
|
45,498
|
|
Deferred income
taxes
|
|
|
(90,214)
|
|
|
|
(101,133)
|
|
Stock compensation
expense
|
|
|
66,214
|
|
|
|
57,871
|
|
Realized loss on
marketable securities
|
|
|
56
|
|
|
|
982
|
|
Changes in operating
assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
|
(54,756)
|
|
|
|
156,666
|
|
Inventories
|
|
|
111,459
|
|
|
|
(442,312)
|
|
Other current and
noncurrent assets
|
|
|
28,288
|
|
|
|
29,299
|
|
Accounts
payable
|
|
|
55,340
|
|
|
|
(64,199)
|
|
Other current and
noncurrent liabilities
|
|
|
430
|
|
|
|
(84,287)
|
|
Deferred
revenue
|
|
|
7,063
|
|
|
|
(3,299)
|
|
Deferred
costs
|
|
|
(1,152)
|
|
|
|
3,426
|
|
Income
taxes
|
|
|
(102,024)
|
|
|
|
20,067
|
|
Net cash provided by
operating activities
|
|
|
910,324
|
|
|
|
419,594
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
|
(144,876)
|
|
|
|
(184,928)
|
|
Proceeds from sale of
property and equipment
|
|
|
157
|
|
|
|
1,693
|
|
Purchase of intangible
assets
|
|
|
(1,175)
|
|
|
|
(1,411)
|
|
Purchase of marketable
securities
|
|
|
(116,039)
|
|
|
|
(1,044,942)
|
|
Redemption of
marketable securities
|
|
|
145,094
|
|
|
|
923,894
|
|
Acquisitions, net of
cash acquired
|
|
|
(150,853)
|
|
|
|
(13,455)
|
|
Net cash used in
investing activities
|
|
|
(267,692)
|
|
|
|
(319,149)
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
(419,166)
|
|
|
|
(399,074)
|
|
Proceeds from issuance
of treasury stock related to equity awards
|
|
|
21,946
|
|
|
|
41,052
|
|
Purchase of treasury
stock related to equity awards
|
|
|
(9,397)
|
|
|
|
(14,750)
|
|
Purchase of treasury
stock under share repurchase plan
|
|
|
(79,533)
|
|
|
|
(105,206)
|
|
Net cash used in
financing activities
|
|
|
(486,150)
|
|
|
|
(477,978)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
|
(12,854)
|
|
|
|
(38,265)
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease)
in cash, cash equivalents, and restricted cash
|
|
|
143,628
|
|
|
|
(415,798)
|
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
|
|
1,279,912
|
|
|
|
1,498,843
|
|
Cash, cash equivalents,
and restricted cash at end of period
|
|
$
|
1,423,540
|
|
|
$
|
1,083,045
|
|
Garmin Ltd. and
Subsidiaries
Net Sales, Gross Profit and Operating Income by Segment
(Unaudited)
(In thousands)
|
|
The Company announced
an organization realignment in January 2023, which combined the
consumer auto operating segment with the outdoor operating segment.
As a result, the Company's operating segments, which also
represent our reportable segments, are fitness, outdoor, aviation,
marine, and auto OEM. Results for the 13-week and 39-week periods
ended September 24, 2022 have been recast below to conform
with the current period presentation. This change had no effect on
the Company's consolidated results of operations.
|
|
|
|
Fitness
|
|
|
Outdoor
|
|
|
Aviation
|
|
|
Marine
|
|
|
Auto
OEM
|
|
|
Total
|
|
13-Weeks Ended
September 30, 2023
|
|
Net sales
|
|
$
|
352,976
|
|
|
$
|
433,997
|
|
|
$
|
198,160
|
|
|
$
|
182,248
|
|
|
$
|
110,150
|
|
|
$
|
1,277,531
|
|
Gross profit
|
|
|
190,685
|
|
|
|
270,774
|
|
|
|
148,364
|
|
|
|
95,186
|
|
|
|
23,560
|
|
|
|
728,569
|
|
Operating income
(loss)
|
|
|
74,614
|
|
|
|
136,401
|
|
|
|
49,269
|
|
|
|
23,850
|
|
|
|
(13,765)
|
|
|
|
270,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks Ended
September 24, 2022
|
|
Net sales
|
|
$
|
279,875
|
|
|
$
|
406,832
|
|
|
$
|
188,043
|
|
|
$
|
196,506
|
|
|
$
|
69,178
|
|
|
$
|
1,140,434
|
|
Gross profit
|
|
|
147,716
|
|
|
|
250,412
|
|
|
|
137,732
|
|
|
|
110,747
|
|
|
|
23,892
|
|
|
|
670,499
|
|
Operating income
(loss)
|
|
|
40,850
|
|
|
|
122,947
|
|
|
|
48,487
|
|
|
|
44,950
|
|
|
|
(17,861)
|
|
|
|
239,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39-Weeks Ended
September 30, 2023
|
|
Net sales
|
|
$
|
932,561
|
|
|
$
|
1,210,773
|
|
|
$
|
629,195
|
|
|
$
|
677,026
|
|
|
$
|
296,196
|
|
|
$
|
3,745,751
|
|
Gross profit
|
|
|
484,759
|
|
|
|
755,800
|
|
|
|
463,774
|
|
|
|
365,162
|
|
|
|
71,311
|
|
|
|
2,140,806
|
|
Operating income
(loss)
|
|
|
139,651
|
|
|
|
351,399
|
|
|
|
169,730
|
|
|
|
142,135
|
|
|
|
(51,209)
|
|
|
|
751,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39-Weeks Ended
September 24, 2022
|
|
Net sales
|
|
$
|
772,867
|
|
|
$
|
1,318,810
|
|
|
$
|
567,548
|
|
|
$
|
693,369
|
|
|
$
|
201,337
|
|
|
$
|
3,553,931
|
|
Gross profit
|
|
|
387,921
|
|
|
|
819,376
|
|
|
|
413,206
|
|
|
|
376,734
|
|
|
|
64,568
|
|
|
|
2,061,805
|
|
Operating income
(loss)
|
|
|
64,894
|
|
|
|
439,129
|
|
|
|
150,359
|
|
|
|
172,451
|
|
|
|
(66,162)
|
|
|
|
760,671
|
|
Garmin Ltd. and
Subsidiaries
|
|
Net Sales by
Geography (Unaudited)
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended
|
|
|
39-Weeks
Ended
|
|
|
|
September 30,
|
|
|
September 24,
|
|
|
YoY
|
|
|
September 30,
|
|
|
September 24,
|
|
|
YoY
|
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
|
2023
|
|
|
2022
|
|
|
Change
|
|
Net sales
|
|
$
|
1,277,531
|
|
|
$
|
1,140,434
|
|
|
12 %
|
|
|
$
|
3,745,751
|
|
|
$
|
3,553,931
|
|
|
5 %
|
|
Americas
|
|
|
628,157
|
|
|
|
563,310
|
|
|
12 %
|
|
|
|
1,881,710
|
|
|
|
1,780,117
|
|
|
6 %
|
|
EMEA
|
|
|
439,123
|
|
|
|
382,865
|
|
|
15 %
|
|
|
|
1,252,526
|
|
|
|
1,192,893
|
|
|
5 %
|
|
APAC
|
|
|
210,251
|
|
|
|
194,259
|
|
|
8 %
|
|
|
|
611,515
|
|
|
|
580,921
|
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
thousands)
|
|
13-Weeks
Ended
|
|
|
39-Weeks
Ended
|
|
|
|
September 30,
|
|
|
September 24,
|
|
|
September 30,
|
|
|
September 24,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
$
|
|
|
ETR(1)
|
|
|
$
|
|
|
ETR(1)
|
|
|
$
|
|
|
ETR(1)
|
|
|
$
|
|
|
ETR(1)
|
|
GAAP income tax
provision
|
|
$
|
22,328
|
|
|
|
8.0
|
%
|
|
$
|
9,419
|
|
|
|
4.3
|
%
|
|
$
|
69,810
|
|
|
|
8.5
|
%
|
|
$
|
54,785
|
|
|
|
7.5
|
%
|
Pro forma discrete tax
item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect of state
rate change(2)
|
|
|
(2,269)
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(2,269)
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Pro forma income tax
provision
|
|
$
|
20,059
|
|
|
|
7.2
|
%
|
|
$
|
9,419
|
|
|
|
4.3
|
%
|
|
$
|
67,541
|
|
|
|
8.3
|
%
|
|
$
|
54,785
|
|
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 third quarter
2023, the Company recognized $2.3 million of tax expense due to the
revaluation of deferred tax assets associated with the change in
corporate income tax rate for
the state of Kansas. The impact of the revaluation of these
deferred tax assets was not reflective of income tax expense
incurred as a result of current period earnings.
|
|
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 30,
|
|
|
September 24,
|
|
|
September 30,
|
|
|
September 24,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
GAAP net
income
|
|
$
|
257,243
|
|
|
$
|
210,848
|
|
|
$
|
747,509
|
|
|
$
|
680,313
|
|
Foreign currency gains
/ losses(1)
|
|
|
11,539
|
|
|
|
29,863
|
|
|
|
(6,946)
|
|
|
|
55,809
|
|
Tax effect of foreign
currency gains/ losses(2)
|
|
|
(828)
|
|
|
|
(1,277)
|
|
|
|
574
|
|
|
|
(4,159)
|
|
Pro forma discrete tax
item(3)
|
|
|
2,269
|
|
|
|
—
|
|
|
|
2,269
|
|
|
|
—
|
|
Pro forma net
income
|
|
$
|
270,223
|
|
|
$
|
239,434
|
|
|
$
|
743,406
|
|
|
$
|
731,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.34
|
|
|
$
|
1.09
|
|
|
$
|
3.91
|
|
|
$
|
3.53
|
|
Diluted
|
|
$
|
1.34
|
|
|
$
|
1.09
|
|
|
$
|
3.90
|
|
|
$
|
3.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.41
|
|
|
$
|
1.24
|
|
|
$
|
3.88
|
|
|
$
|
3.79
|
|
Diluted
|
|
$
|
1.41
|
|
|
$
|
1.24
|
|
|
$
|
3.88
|
|
|
$
|
3.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
191,435
|
|
|
|
192,672
|
|
|
|
191,409
|
|
|
|
192,878
|
|
Diluted
|
|
|
191,868
|
|
|
|
193,105
|
|
|
|
191,772
|
|
|
|
193,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 rates of 7.2% and 8.3% for the 13-weeks and
39-weeks ended September 30, 2023,
respectively and 4.3% and 7.5% for the 13-weeks and 39-weeks ended
September 24, 2022, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) The discrete tax
item is 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.
(In
thousands)
|
|
13-Weeks
Ended
|
|
|
39-Weeks
Ended
|
|
|
|
September 30,
|
|
|
September 24,
|
|
|
September 30,
|
|
|
September 24,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
Net cash provided by
operating activities
|
|
$
|
357,412
|
|
|
$
|
154,118
|
|
|
$
|
910,324
|
|
|
$
|
419,594
|
|
Less: purchases of
property and equipment
|
|
|
(45,530)
|
|
|
|
(50,130)
|
|
|
|
(144,876)
|
|
|
|
(184,928)
|
|
Free Cash
Flow
|
|
$
|
311,882
|
|
|
$
|
103,988
|
|
|
$
|
765,448
|
|
|
$
|
234,666
|
|
Forward-looking Financial Measures
The forward-looking financial measures in our 2023 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 $0.03 per share for the 39-weeks
ended September 30, 2023.
At this time, management is unable to determine whether or not
additional significant discrete tax items will occur in fiscal
2023, estimate the impact of any such items, or anticipate the
impact of any other events that may be considered in the
calculation of non-GAAP financial measures.
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SOURCE Garmin Ltd.