Garmin reports record third quarter operating results; issues fiscal 2020 guidance
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Garmin reports record third quarter operating results; issues fiscal 2020 guidance

SCHAFFHAUSEN, Switzerland — (BUSINESS WIRE) — October 28, 2020 — Garmin Ltd. (Nasdaq: GRMN) today announced results for the third quarter ended September 26.

Highlights for third quarter 2020 include:

(in thousands, except per share data)

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

%

Marine

 

165,437

 

 

107,694

 

54

%

 

486,269

 

 

393,070

 

24

%

Fitness

 

328,446

 

 

243,099

 

35

%

 

846,688

 

 

675,007

 

25

%

Outdoor

 

334,844

 

 

258,294

 

30

%

 

716,146

 

 

622,748

 

15

%

Auto

 

129,355

 

 

137,722

 

(6

)%

 

320,215

 

 

422,132

 

(24

)%

Aviation

 

151,112

 

 

187,574

 

(19

)%

 

465,850

 

 

542,316

 

(14

)%

 

 

 

 

 

 

 

 

 

 

 

Gross margin %

60.2

%

60.7

%

 

59.6

%

60.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating income %

28.6

%

28.0

%

 

24.1

%

25.2

%

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

$

1.63

 

$

1.19

 

37

%

$

3.44

 

$

3.10

 

11

%

Pro forma diluted EPS(1)

$

1.58

 

$

1.27

 

24

%

$

3.41

 

$

3.16

 

8

%

 

 

 

 

 

 

 

 

 

 

 

(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:

“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.”

Marine:

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 OnDeck 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 Fantom 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 Clipboard 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.

Outdoor:

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.

Auto:

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.

2020 Guidance (2):

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%.

 

 

2020 Guidance

 

Segment

 

2020 Revenue
Growth Estimates

Revenue

 

~$4.0B

 

Marine

 

~25%

Gross Margin

 

~59.0%

 

Fitness

 

~20%

Operating Margin

 

~24.0%

 

Outdoor

 

~15%

Tax Rate

 

~10.0%

 

Aviation

 

~(17%)

EPS

 

~$4.70

 

Auto

 

~(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:

When:

Wednesday, October 28, 2020 at 10:30 a.m. Eastern

Where:

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

How:

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

An archive of the live webcast will be available until 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

 

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)

 

 

 

13-Weeks Ended

 

39-Weeks Ended

 

 

September 26,

 

September 28,

 

September 26,

 

September 28,

 

 

2020

 

2019

 

2020

 

2019

Net sales

$

1,109,194

$

934,383

 

$

2,835,168

 

$

2,655,273

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

441,211

 

366,925

 

 

1,144,816

 

 

1,060,752

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

667,983

 

567,458

 

 

1,690,352

 

 

1,594,521

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

33,866

 

32,668

 

 

90,031

 

 

101,808

 

Selling, general and administrative expense

 

142,134

 

124,769

 

 

411,335

 

 

380,289

 

Research and development expense

 

174,882

 

148,561

 

 

506,013

 

 

443,361

 

Total operating expense

 

350,882

 

305,998

 

 

1,007,379

 

 

925,458

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

317,101

 

261,460

 

 

682,973

 

 

669,063

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

7,777

 

12,309

 

 

30,258

 

 

39,748

 

Foreign currency gains (losses)

 

10,113

 

(16,296

)

 

(9,802

)

 

(12,568

)

Other income (expense)

 

1,726

 

294

 

 

8,515

 

 

3,567

 

Total other income (expense)

 

19,616

 

(3,693

)

 

28,971

 

 

30,747

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

336,717

 

257,767

 

 

711,944

 

 

699,810

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

23,300

 

29,901

 

 

53,168

 

 

108,115

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

313,417

$

227,866

 

$

658,776

 

$

591,695

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.64

$

1.20

 

$

3.45

 

$

3.12

 

Diluted

$

1.63

$

1.19

 

$

3.44

 

$

3.10

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

191,234

 

190,102

 

 

191,021

 

 

189,853

 

Diluted

 

191,998

 

190,962

 

 

191,760

 

 

190,790

 

 

Garmin Ltd. And Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share information)

 

 

September 26
2020

December 28
2019

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

1,223,516

 

$

1,027,567

 

Marketable securities

 

430,164

 

 

376,463

 

Accounts receivable, net

 

658,000

 

 

706,763

 

Inventories

 

821,377

 

 

752,908

 

Deferred costs

 

21,067

 

 

25,105

 

Prepaid expenses and other current assets

 

187,746

 

 

169,044

 

Total current assets

 

3,341,870

 

 

3,057,850

 

 

 

 

 

 

 

 

Property and equipment, net

 

813,561

 

 

728,921

 

Operating lease right-of-use assets

 

74,949

 

 

63,589

 

 

 

 

 

 

 

 

Restricted cash

 

293

 

 

71

 

Marketable securities

 

1,058,103

 

 

1,205,475

 

Deferred income taxes

 

247,502

 

 

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.

Free cash flow

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.

Category: Corporate, Earnings



Contact:

Investor Relations Contact:
Teri Seck
913/397-8200
investor.relations@garmin.com

Media Relations Contact:
Carly Hysell
913/397-8200
media.relations@garmin.com