Company reports record third quarter revenue

SCHAFFHAUSEN, Switzerland–(BUSINESS WIRE)–Garmin® Ltd. (NASDAQ: GRMN), today announced results for the third quarter ended September 25, 2021.

Highlights for third quarter 2021 include:

  • Total revenue of $1.19 billion, a 7% increase over the prior year quarter
  • Gross and operating margin were 58.4% and 23.7%, respectively
  • Operating income of $283 million, an 11% decrease compared to the prior year quarter
  • GAAP EPS was $1.34 and pro forma EPS(1) was $1.41
  • Named Manufacturer of the Year by the National Marine Electronics Association for the seventh consecutive year
  • Ranked #1 in avionics support for the 18th consecutive year by Aviation International News
  • Received production qualification from BMW for our Olathe, Kansas manufacturing facility
  • Launched the Approach® R10, our first portable golf launch monitor
  • Recently hosted fifth annual Garmin Developer Conference where we announced strategic Connect IQ partnerships

 (In thousands, except per share information)

 

13-Weeks Ended

 

 

39-Weeks Ended

 

 

 

September 25,

 

 

September 26,

 

 

YoY

 

 

September 25,

 

 

September 26,

 

 

YoY

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Net sales

 

$

1,191,973

 

 

$

1,109,194

 

 

7%

 

 

$

3,591,206

 

 

$

2,835,168

 

 

27%

 

Fitness

 

 

342,316

 

 

 

328,446

 

 

4%

 

 

 

1,063,642

 

 

 

846,688

 

 

26%

 

Outdoor

 

 

323,856

 

 

 

334,844

 

 

(3)%

 

 

 

903,715

 

 

 

716,146

 

 

26%

 

Aviation

 

 

180,165

 

 

 

151,112

 

 

19%

 

 

 

534,886

 

 

 

465,850

 

 

15%

 

Marine

 

 

207,534

 

 

 

165,437

 

 

25%

 

 

 

678,698

 

 

 

486,269

 

 

40%

 

Auto

 

 

138,102

 

 

 

129,355

 

 

7%

 

 

 

410,265

 

 

 

320,215

 

 

28%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin %

 

58.4%

 

 

60.2%

 

 

 

 

 

 

59.0%

 

 

59.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income %

 

23.7%

 

 

28.6%

 

 

 

 

 

 

25.2%

 

 

24.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

 

$

1.34

 

 

$

1.63

 

 

(18)%

 

 

$

4.13

 

 

$

3.44

 

 

20%

 

Pro forma diluted EPS(1)

 

$

1.41

 

 

$

1.58

 

 

(11)%

 

 

$

4.27

 

 

$

3.41

 

 

25%

 

 

(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:

“I am very pleased with our performance in the quarter as we are now comparing against the robust pandemic-driven growth from the prior year,” said Cliff Pemble, President and CEO of Garmin. “Strong demand for active lifestyle products continued, and our marine and aviation segments recorded impressive double-digit growth resulting in record consolidated revenue in the third quarter. We are very pleased with the results we have delivered thus far, giving us confidence to raise our full year 2021 revenue and EPS guidance.”

Fitness:

Revenue from the fitness segment grew 4% in the third quarter driven by solid demand for our cycling and advanced wearable products. Gross margin and operating margins were 53% and 23%, respectively, resulting in $78 million of operating income. We recently hosted our fifth annual Garmin Developer Conference where we announced a collaboration with Dexcom to provide people with Type 1 and Type 2 diabetes with a way to quickly see their glucose levels and trends on their compatible Garmin smartwatch or cycling computer.

Outdoor:

Revenue from the outdoor segment decreased 3% in the third quarter primarily due to the timing of product introductions in the prior year. Gross margin and operating margins were 65% and 38%, respectively, resulting in $124 million of operating income. During the quarter, we launched the Approach R10, our first portable golf launch monitor, designed to help golfers improve their game with more than a dozen key metrics shown in real time.

Aviation:

Revenue from the aviation segment grew 19% in the third quarter with contributions from both OEM and aftermarket product categories. Gross margin and operating margins were 73% and 28%, respectively, resulting in $51 million of operating income. During the quarter, we introduced Smart Glide, a revolutionary safety tool that helps pilots in loss of engine power emergencies by automating tasks to reduce pilot workload. Also during the quarter, we announced the certification of our GFC 600H flight control system for Bell 505 helicopters. The GFC 600H reduces a pilot’s workload and brings a number of helicopter-specific safety features to the market.

Marine:

Revenue from the marine segment grew 25% in the third quarter with growth across multiple categories, led by strong demand for our chartplotters. Gross margin and operating margins were 56% and 26%, respectively, resulting in $54 million of operating income. During the quarter, we launched Surround View, the marine industry’s first intelligent camera system to offer captains a 360-degree bird’s-eye view around the boat. Also, during the quarter, Garmin marine electronics were selected by Malibu Boats to exclusively outfit their full line of Axis wakesurf and wakeboarding boats.

Auto:

Revenue from the auto segment grew 7% during the third quarter primarily driven by growth in auto OEM programs. Gross margin was 40%, and we recorded an operating loss of $24 million in the quarter driven by investments in auto OEM programs. During the quarter, we began production shipments of the BMW computing module from our United States manufacturing facility and began prototype shipments of next-generation BMW computing modules from our Poland manufacturing facility. Also, we recently introduced a new lineup of Drive navigators for the consumer market, bringing larger displays and more connected features to our customers.

Additional Financial Information:

Total operating expenses in the third quarter were $413 million, an 18% increase over the prior year. Research and development increased by 22%, primarily due to engineering personnel costs. Selling, general and administrative expenses increased 14%, driven primarily by personnel related expenses and information technology costs. Advertising increased 8% driven primarily by higher media spend in the quarter.

The effective tax rate in the third quarter of 2021 was 5.9% compared to 6.9% in the prior year quarter.

In the third quarter of 2021, we generated approximately $204 million of free cash flow(1) and paid a quarterly dividend of approximately $129 million. We ended the quarter with cash and marketable securities of approximately $3.2 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.

2021 Guidance(2):

Based on our strong performance in the first three quarters of 2021, we are updating our full year guidance. We now anticipate revenue of approximately $4.95 billion with projected growth in all segments. We anticipate our full year pro forma EPS will be approximately $5.60 based on a gross margin of approximately 58.2%, operating margin of approximately 24.0% and a full year pro forma effective tax rate of approximately 11.5%.

 

 

2021 Guidance

 

Segment

 

Revenue Growth Estimates

 

 

Updated

 

Prior

 

 

 

Updated

 

Prior

Revenue

 

$4.95B

 

$4.90B

 

Fitness

 

17%

 

17%

Gross Margin

 

58.2%

 

58.5%

 

Outdoor

 

17%

 

17%

Operating Margin

 

24.0%

 

23.8%

 

Aviation

 

12%

 

10%

Tax Rate

 

11.5%

 

11.5%

 

Marine

 

30%

 

27%

EPS

 

$5.60

 

$5.50

 

Auto

 

17%

 

15%

 

 

 

 

 

 

 

 

 

 

 

(2) All amounts and %s in the above 2021 Guidance tables are approximate. Also, 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 27, 2021 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 26, 2022 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 2021 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 launches, market reach, statements relating to possible future dividends, statements related to the ongoing impact of the COVID-19 pandemic, and the Company’s plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of risk factors and uncertainties affecting Garmin, including, but not limited to, the risk factors that are described in both the Annual Report on Form 10-K for the year ended December 26, 2020 and the Quarterly Report on Form 10-Q for the quarter ended September 25, 2021 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2020 Form 10-K and the Q3 2021 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 September 25, 2021. 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, and Approach are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Drive 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

39-Weeks Ended

 

 

September 25,

 

September 26,

September 25,

 

September 26,

 

 

2021

 

2020

2021

 

2020

 

Net sales

$

1,191,973

 

$

1,109,194

$

3,591,206

 

$

2,835,168

 

Cost of goods sold

 

496,026

 

 

441,211

 

1,472,852

 

 

1,144,816

 

Gross profit

 

695,947

 

 

667,983

 

2,118,354

 

 

1,690,352

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

36,705

 

 

33,866

 

110,705

 

 

90,031

 

Selling, general and administrative expense

 

162,515

 

 

142,134

 

485,896

 

 

411,335

 

Research and development expense

 

214,057

 

 

174,882

 

618,253

 

 

506,013

 

Total operating expense

 

413,277

 

 

350,882

 

1,214,854

 

 

1,007,379

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

282,670

 

 

317,101

 

903,500

 

 

682,973

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

6,897

 

 

7,777

 

21,568

 

 

30,258

 

Foreign currency (losses) gains

 

(15,014

)

 

10,113

 

(30,621

)

 

(9,802

)

Other income

 

833

 

 

1,726

 

3,511

 

 

8,515

 

Total other income (expense)

 

(7,284

)

 

19,616

 

(5,542

)

 

28,971

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

275,386

 

 

336,717

 

897,958

 

 

711,944

 

Income tax provision

 

16,347

 

 

23,300

 

101,894

 

 

53,168

 

Net income

$

259,039

 

$

313,417

$

796,064

 

$

658,776

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.35

 

$

1.64

$

4.14

 

$

3.45

 

Diluted

$

1.34

 

$

1.63

$

4.13

 

$

3.44

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

192,322

 

 

191,234

 

192,123

 

 

191,021

 

Diluted

 

193,185

 

 

191,998

 

192,955

 

 

191,760

 

Garmin Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share information)

 

 

 

 

 

 

September 25,

2021

 

 

December 26,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,639,056

 

 

$

1,458,442

 

Marketable securities

 

 

345,214

 

 

 

387,642

 

Accounts receivable, net

 

 

639,345

 

 

 

849,469

 

Inventories

 

 

1,113,503

 

 

 

762,084

 

Deferred costs

 

 

16,046

 

 

 

20,145

 

Prepaid expenses and other current assets

 

 

255,802

 

 

 

191,569

 

Total current assets

 

 

4,008,966

 

 

 

3,669,351

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

974,981

 

 

 

855,539

 

Operating lease right-of-use assets

 

 

89,934

 

 

 

94,626

 

Marketable securities

 

 

1,253,589

 

 

 

1,131,175

 

Deferred income taxes

 

 

251,983

 

 

 

245,455

 

Noncurrent deferred costs

 

 

13,035

 

 

 

16,510

 

Intangible assets, net

 

 

809,163

 

 

 

828,566

 

Other assets

 

 

169,838

 

 

 

190,151

 

Total assets

 

$

7,571,489

 

 

$

7,031,373

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

318,604

 

 

$

258,885

 

Salaries and benefits payable

 

 

173,566

 

 

 

181,937

 

Accrued warranty costs

 

 

42,849

 

 

 

42,643

 

Accrued sales program costs

 

 

78,251

 

 

 

109,891

 

Deferred revenue

 

 

87,770

 

 

 

86,865

 

Accrued advertising expense

 

 

30,044

 

 

 

31,950

 

Other accrued expenses

 

 

146,426

 

 

 

149,817

 

Income taxes payable

 

 

109,862

 

 

 

68,585

 

Dividend payable

 

 

386,567

 

 

 

233,644

 

Total current liabilities

 

 

1,373,939

 

 

 

1,164,217

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

127,733

 

 

 

116,844

 

Noncurrent income taxes

 

 

78,176

 

 

 

92,810

 

Noncurrent deferred revenue

 

 

42,022

 

 

 

49,934

 

Noncurrent operating lease liabilities

 

 

71,527

 

 

 

75,958

 

Other liabilities

 

 

23,354

 

 

 

15,494

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 192,322

shares outstanding at September 25, 2021 and 191,571 shares outstanding

at December 26, 2020

 

 

17,979

 

 

 

17,979

 

Additional paid-in capital

 

 

1,950,464

 

 

 

1,880,354

 

Treasury stock

 

 

(303,373

)

 

 

(320,016

)

Retained earnings

 

 

4,034,912

 

 

 

3,754,372

 

Accumulated other comprehensive income

 

 

154,756

 

 

 

183,427

 

Total stockholders’ equity

 

 

5,854,738

 

 

 

5,516,116

 

Total liabilities and stockholders’ equity

 

$

7,571,489

 

 

$

7,031,373

 

Garmin Ltd. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

 

 

 

 

 

 

39-Weeks Ended

 

 

 

September 25,

2021

 

 

September 26,

2020

 

Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

796,064

 

 

$

658,776

 

Adjustments to reconcile net income to net cash provided by

operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

75,272

 

 

 

57,141

 

Amortization

 

 

38,485

 

 

 

32,969

 

Loss (gain) on sale or disposal of property and equipment

 

 

246

 

 

 

(1,815

)

Unrealized foreign currency losses

 

 

24,390

 

 

 

4,384

 

Deferred income taxes

 

 

8,358

 

 

 

14,353

 

Stock compensation expense

 

 

68,656

 

 

 

53,515

 

Realized gain on marketable securities

 

 

(513

)

 

 

(1,316

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net of allowance for doubtful accounts

 

 

197,024

 

 

 

59,474

 

Inventories

 

 

(357,387

)

 

 

(56,063

)

Other current and non-current assets

 

 

(31,398

)

 

 

(27,019

)

Accounts payable

 

 

57,602

 

 

 

(11,939

)

Other current and non-current liabilities

 

 

(39,941

)

 

 

(18,299

)

Deferred revenue

 

 

(6,914

)

 

 

(21,148

)

Deferred costs

 

 

7,547

 

 

 

9,855

 

Income taxes payable

 

 

5,974

 

 

 

(53,419

)

Net cash provided by operating activities

 

 

843,465

 

 

 

699,449

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(187,960

)

 

 

(137,072

)

Proceeds from sale of property and equipment

 

 

26

 

 

 

1,965

 

Purchase of intangible assets

 

 

(1,408

)

 

 

(1,643

)

Purchase of marketable securities

 

 

(1,081,789

)

 

 

(702,487

)

Redemption of marketable securities

 

 

975,318

 

 

 

808,554

 

Acquisitions, net of cash acquired

 

 

(15,893

)

 

 

(148,648

)

Net cash used in investing activities

 

 

(311,706

)

 

 

(179,331

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Dividends

 

 

(362,602

)

 

 

(333,975

)

Proceeds from issuance of treasury stock related to equity awards

 

 

35,733

 

 

 

15,202

 

Purchase of treasury stock related to equity awards

 

 

(17,636

)

 

 

(13,074

)

Net cash used in financing activities

 

 

(344,505

)

 

 

(331,847

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(6,172

)

 

 

7,900

 

 

 

 

 

 

 

 

 

 

Net increase in cash, cash equivalents, and restricted cash

 

 

181,082

 

 

 

196,171

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

1,458,748

 

 

 

1,027,638

 

Cash, cash equivalents, and restricted cash at end of period

 

$

1,639,830

 

 

$

1,223,809

 

The following table includes supplemental financial information for the consumer auto and auto OEM operating segments that management believes is useful.

Garmin Ltd. and Subsidiaries
Net Sales, Gross Profit and Operating Income by Segment
(In thousands)

 

 

 

 

Auto

 

 

 

 

Fitness

 

 

Outdoor

 

 

Aviation

 

 

Marine

 

 

Total

Auto

 

 

Consumer

Auto

 

 

Auto

OEM

 

 

Total

 

13-Weeks Ended September 25, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

342,316

 

 

$

323,856

 

 

$

180,165

 

 

$

207,534

 

 

$

138,102

 

 

$

82,914

 

 

$

55,188

 

 

$

1,191,973

 

Gross profit

 

 

183,028

 

 

 

210,522

 

 

 

131,260

 

 

 

116,152

 

 

 

54,985

 

 

 

39,342

 

 

 

15,643

 

 

 

695,947

 

Operating income (loss)

 

 

77,788

 

 

 

123,946

 

 

 

51,296

 

 

 

53,726

 

 

 

(24,086

)

 

 

11,305

 

 

 

(35,391

)

 

 

282,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended September 26, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

328,446

 

 

$

334,844

 

 

$

151,112

 

 

$

165,437

 

 

$

129,355

 

 

$

82,659

 

 

$

46,696

 

 

$

1,109,194

 

Gross profit

 

 

177,794

 

 

 

223,704

 

 

 

107,927

 

 

 

100,423

 

 

 

58,135

 

 

 

43,319

 

 

 

14,816

 

 

 

667,983

 

Operating income (loss)

 

 

87,083

 

 

 

147,477

 

 

 

28,597

 

 

 

50,482

 

 

 

3,462

 

 

 

18,178

 

 

 

(14,716

)

 

 

317,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39-Weeks Ended September 25, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,063,642

 

 

$

903,715

 

 

$

534,886

 

 

$

678,698

 

 

$

410,265

 

 

$

231,587

 

 

$

178,678

 

 

$

3,591,206

 

Gross profit

 

 

581,765

 

 

 

590,355

 

 

 

389,376

 

 

 

390,141

 

 

 

166,717

 

 

 

113,567

 

 

 

53,150

 

 

 

2,118,354

 

Operating income (loss)

 

 

268,489

 

 

 

339,031

 

 

 

146,974

 

 

 

205,042

 

 

 

(56,036

)

 

 

35,388

 

 

 

(91,424

)

 

 

903,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39-Weeks Ended September 26, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

846,688

 

 

$

716,146

 

 

$

465,850

 

 

$

486,269

 

 

$

320,215

 

 

$

196,942

 

 

$

123,273

 

 

$

2,835,168

 

Gross profit

 

 

446,936

 

 

 

469,150

 

 

 

338,770

 

 

 

288,103

 

 

 

147,393

 

 

 

98,348

 

 

 

49,045

 

 

 

1,690,352

 

Operating income (loss)

 

 

190,075

 

 

 

262,057

 

 

 

103,483

 

 

 

134,195

 

 

 

(6,837

)

 

 

25,628

 

 

 

(32,465

)

 

 

682,973

 

Garmin Ltd. and Subsidiaries
Net Sales by Geography
(In thousands)

 

 

 

 

 

13-Weeks Ended

 

 

39-Weeks Ended

 

 

 

September 25,
2021

 

 

September 26,
2020

 

 

YoY
Change

 

 

September 25,
2021

 

 

September 26,
2020

 

 

YoY
Change

 

Net sales

 

$

1,191,973

 

 

$

1,109,194

 

 

7%

 

 

$

3,591,206

 

 

$

2,835,168

 

 

27%

 

Americas

 

 

573,331

 

 

 

521,869

 

 

10%

 

 

 

1,723,415

 

 

 

1,372,360

 

 

26%

 

EMEA

 

 

442,622

 

 

 

407,859

 

 

9%

 

 

 

1,330,855

 

 

 

1,042,928

 

 

28%

 

APAC

 

 

176,020

 

 

 

179,466

 

 

(2)%

 

 

 

536,936

 

 

 

419,880

 

 

28%

 

 

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

Non-GAAP Financial Information

To supplement our financial results presented in accordance with GAAP, this release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: pro forma effective tax rate, pro forma net income (earnings) per share and free cash flow. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies, limiting the usefulness of the measures for comparison with other companies. Management believes providing investors with an operating view consistent with how it manages the Company provides enhanced transparency into the operating results of the Company, as described in more detail by category below.

The tables below provide reconciliations between the GAAP and non-GAAP measures.

Pro forma effective tax rate

The Company’s income tax expense is periodically impacted by discrete tax items that are not reflective of income tax expense incurred as a result of current period earnings. Therefore, management believes disclosure of the effective tax rate and income tax provision before the effect of certain discrete tax items are important measures to permit investors’ consistent comparison between periods. In the 39-weeks ended September 25, 2021, there were no such discrete tax items identified.

(In thousands)

13-Weeks Ended

39-Weeks Ended

 

September 25,

September 26,

September 25,

September 26,

 

2021

2020

2021

2020

 

$

 

ETR(1)

$

 

ETR(1)

$

 

ETR(1)

$

 

ETR(1)

GAAP income tax provision

$16,347

 

5.9%

$23,300

 

6.9%

$101,894

 

11.3%

$53,168

 

7.5%

Pro forma discrete tax item:

 

Uncertain tax reserve release(2)

 

 

 

 

 

 

14,308

 

 

Pro forma income tax provision

$16,347

 

5.9%

$23,300

 

6.9%

$101,894

 

11.3%

$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.

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 25,

 

September 26,

 

September 25,

 

September 26,

 

 

2021

 

2020

 

2021

 

2020

 

GAAP net income

$

259,039

 

$

313,417

 

$

796,064

 

$

658,776

 

Foreign currency gains / losses(1)

 

15,014

 

 

(10,113

)

 

30,621

 

 

9,802

 

Tax effect of foreign currency gains / losses(2)

 

(891

)

 

700

 

 

(3,475

)

 

(929

)

Pro forma discrete tax item(3)

 

 

 

 

 

 

 

(14,308

)

Pro forma net income

$

273,162

 

$

304,004

 

$

823,210

 

$

653,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.35

 

$

1.64

 

$

4.14

 

$

3.45

 

Diluted

$

1.34

 

$

1.63

 

$

4.13

 

$

3.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.42

 

$

1.59

 

$

4.28

 

$

3.42

 

Diluted

$

1.41

 

$

1.58

 

$

4.27

 

$

3.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

192,322

 

 

191,234

 

 

192,123

 

 

191,021

 

Diluted

 

193,185

 

 

191,998

 

 

192,955

 

 

191,760

 

 

(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 effective tax rate of 5.9% and 11.3% for the 13-weeks and 39-weeks ended September 25, 2021, respectively, and a pro forma effective tax rate of 6.9% and 9.5% for the 13-weeks and 39-weeks ended September 26, 2020, respectively.

 

(3) The discrete tax item is discussed in the pro forma effective tax rate section above.

Contacts

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

Media Relations Contact:
Krista Klaus
913/397-8200
media.relations@garmin.com

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