Garmin reports strong revenue and operating income growth for first quarter 2020; withdraws fiscal 2020 guidance due to COVID-19 economic uncertainty

Garmin, the Garmin logo and the Garmin delta are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Panoptix LiveScope 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

Garmin Ltd. And Subsidiaries

 

Condensed Consolidated Statements of Income (Unaudited)

 

(In thousands, except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

 

 

March 28,

 

 

March 30,

 

 

 

2020

 

 

2019

 

Net sales

 

$

856,108

 

 

$

766,050

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

349,168

 

 

 

314,352

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

506,940

 

 

 

451,698

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

 

26,880

 

 

 

27,615

 

Selling, general and administrative expense

 

 

137,186

 

 

 

126,781

 

Research and development expense

 

 

165,392

 

 

 

145,919

 

Total operating expense

 

 

329,458

 

 

 

300,315

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

177,482

 

 

 

151,383

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

12,026

 

 

 

13,704

 

Foreign currency (losses) gains

 

 

(15,423

)

 

 

314

 

Other income

 

 

3,550

 

 

 

864

 

Total other income (expense)

 

 

153

 

 

 

14,882

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

177,635

 

 

 

166,265

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

 

16,455

 

 

 

26,092

 

 

 

 

 

 

 

 

 

 

Net income

 

$

161,180

 

 

$

140,173

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.84

 

 

$

0.74

 

Diluted

 

$

0.84

 

 

$

0.74

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

190,803

 

 

 

189,601

 

Diluted

 

 

191,684

 

 

 

190,599

 

Garmin Ltd. And Subsidiaries

 

Condensed Consolidated Balance Sheets (Unaudited)

 

(In thousands, except per share information)

 

 

 

 

 

 

 

 

 

 

 

 

March 28, 2020

 

 

December 28, 2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,048,604

 

 

$

1,027,567

 

Marketable securities

 

 

391,646

 

 

 

376,463

 

Accounts receivable, net

 

 

500,242

 

 

 

706,763

 

Inventories

 

 

790,180

 

 

 

752,908

 

Deferred costs

 

 

23,650

 

 

 

25,105

 

Prepaid expenses and other current assets

 

 

174,564

 

 

 

169,044

 

Total current assets

 

 

2,928,886

 

 

 

3,057,850

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

754,549

 

 

 

728,921

 

Operating lease right-of-use assets

 

 

66,497

 

 

 

63,589

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

 

283

 

 

 

71

 

Marketable securities

 

 

1,199,613

 

 

 

1,205,475

 

Deferred income taxes

 

 

263,687

 

 

 

268,518

 

Noncurrent deferred costs

 

 

21,436

 

 

 

23,493

 

Intangible assets, net

 

 

658,777

 

 

 

659,629

 

Other assets

 

 

160,265

 

 

 

159,253

 

Total assets

 

$

6,053,993

 

 

$

6,166,799

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

200,281

 

 

$

240,831

 

Salaries and benefits payable

 

 

110,611

 

 

 

128,426

 

Accrued warranty costs

 

 

39,368

 

 

 

39,758

 

Accrued sales program costs

 

 

58,678

 

 

 

112,578

 

Deferred revenue

 

 

89,817

 

 

 

94,562

 

Accrued royalty costs

 

 

5,259

 

 

 

15,401

 

Accrued advertising expense

 

 

19,752

 

 

 

35,142

 

Other accrued expenses

 

 

94,760

 

 

 

95,060

 

Income taxes payable

 

 

54,466

 

 

 

56,913

 

Dividend payable

 

 

108,880

 

 

 

217,262

 

Total current liabilities

 

 

781,872

 

 

 

1,035,933

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

117,792

 

 

 

114,754

 

Noncurrent income taxes

 

 

104,853

 

 

 

105,771

 

Noncurrent deferred revenue

 

 

61,992

 

 

 

67,329

 

Noncurrent operating lease liabilities

 

 

52,834

 

 

 

49,238

 

Other liabilities

 

 

250

 

 

 

278

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 191,017

shares outstanding at March 28, 2020 and 190,686 shares outstanding

at December 28, 2019

 

 

17,979

 

 

 

17,979

 

Additional paid-in capital

 

 

1,830,052

 

 

 

1,835,622

 

Treasury stock

 

 

(335,491

)

 

 

(345,040

)

Retained earnings

 

 

3,390,053

 

 

 

3,229,061

 

Accumulated other comprehensive income

 

 

31,807

 

 

 

55,874

 

Total stockholders’ equity

 

 

4,934,400

 

 

 

4,793,496

 

Total liabilities and stockholders’ equity

 

$

6,053,993

 

 

$

6,166,799

 

Garmin Ltd. And Subsidiaries

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

 

 

March 28, 2020

 

 

March 30, 2019

 

Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

161,180

 

 

$

140,173

 

Adjustments to reconcile net income to net cash provided by

operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

18,198

 

 

 

16,832

 

Amortization

 

 

10,006

 

 

 

7,179

 

(Gain) loss on sale of property and equipment

 

 

(1,846

)

 

 

227

 

Unrealized foreign currency losses

 

 

16,856

 

 

 

3,124

 

Deferred income taxes

 

 

10,378

 

 

 

9,105

 

Stock compensation expense

 

 

15,559

 

 

 

15,129

 

Realized (gain) loss on marketable securities

 

 

(272

)

 

 

60

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net of allowance for doubtful accounts

 

 

197,157

 

 

 

112,896

 

Inventories

 

 

(47,318

)

 

 

(39,067

)

Other current and non-current assets

 

 

(4,367

)

 

 

2,930

 

Accounts payable

 

 

(39,851

)

 

 

(32,786

)

Other current and non-current liabilities

 

 

(98,219

)

 

 

(76,030

)

Deferred revenue

 

 

(10,078

)

 

 

(6,744

)

Deferred costs

 

 

3,511

 

 

 

1,938

 

Income taxes payable

 

 

(5,020

)

 

 

9,616

 

Net cash provided by operating activities

 

 

225,874

 

 

 

164,582

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(41,361

)

 

 

(30,094

)

Proceeds from sale of property and equipment

 

 

1,907

 

 

 

47

 

Purchase of intangible assets

 

 

(953

)

 

 

(413

)

Purchase of marketable securities

 

 

(344,342

)

 

 

(83,068

)

Redemption of marketable securities

 

 

311,935

 

 

 

80,907

 

Acquisitions, net of cash acquired

 

 

(6,058

)

 

 

 

Net cash used in investing activities

 

 

(78,872

)

 

 

(32,621

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Dividends

 

 

(108,571

)

 

 

(200,687

)

Purchase of treasury stock related to equity awards

 

 

(11,580

)

 

 

(12,694

)

Net cash used in financing activities

 

 

(120,151

)

 

 

(213,381

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(5,602

)

 

 

(4,286

)

 

 

 

 

 

 

 

 

 

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

 

 

21,249

 

 

 

(85,706

)

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

 

$

1,048,887

 

 

$

1,116,099

 

Garmin Ltd. And Subsidiaries

 

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

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reportable Segments

 

 

 

Fitness

 

 

Marine

 

 

Outdoor

 

 

Aviation

 

 

Auto

 

 

Total

 

13-Weeks Ended March 28, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

223,601

 

 

$

163,005

 

 

$

175,102

 

 

$

188,599

 

 

$

105,801

 

 

$

856,108

 

Gross profit

 

 

112,325

 

 

 

94,210

 

 

 

112,258

 

 

 

138,808

 

 

 

49,339

 

 

 

506,940

 

Operating income

 

 

31,011

 

 

 

40,159

 

 

 

47,166

 

 

 

59,321

 

 

 

(175

)

 

 

177,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended March 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

180,256

 

 

$

133,968

 

 

$

154,051

 

 

$

170,776

 

 

$

126,999

 

 

$

766,050

 

Gross profit

 

 

90,835

 

 

 

78,055

 

 

 

97,488

 

 

 

127,983

 

 

 

57,337

 

 

 

451,698

 

Operating income

 

 

18,126

 

 

 

25,473

 

 

 

41,953

 

 

 

57,618

 

 

 

8,213

 

 

 

151,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Garmin Ltd. And Subsidiaries

 

Net Sales by Geography (Unaudited)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended

 

 

 

March 28,

 

 

March 30,

 

 

Yr over Yr

 

 

 

2020

 

 

2019

 

 

Change

 

Net sales

 

$

856,108

 

 

$

766,050

 

 

12%

 

Americas

 

 

427,401

 

 

 

379,456

 

 

13%

 

EMEA

 

 

299,867

 

 

 

260,021

 

 

15%

 

APAC

 

 

128,840

 

 

 

126,573

 

 

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA - Europe, Middle East and Africa; APAC - Asia Pacific and Australian Continent

 


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