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 |
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Where: |
||||
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
|
December 28
|
||||||
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
|
|
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,
|
|
September 28,
|
||||
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 |
||||||||||||||||||