Garmin reports strong revenue and operating income growth; proposes 7% dividend increase

SCHAFFHAUSEN, Switzerland–(BUSINESS WIRE)–Garmin Ltd. (Nasdaq: GRMN) today announced results for the fourth quarter and fiscal year ended December 28, 2019.

Highlights for fourth quarter 2019 include:

  • Total revenue of $1.102 billion, an 18% increase, with fitness, aviation, marine and outdoor collectively increasing 24% over the prior year quarter
  • Gross margin of 58.0% compared to 58.9% in the prior year quarter
  • Operating margin improved to 25.1% compared to 23.9% in the prior year quarter
  • Operating income of $277 million, increasing 24% over the prior year quarter
  • GAAP EPS was $1.89 and pro forma EPS(1) was $1.29, representing 26% growth over the prior year quarter
  • The Force™ trolling motor and GPSMAP® 86i were awarded the highly competitive DAME design award at METSTRADE
  • Selected by Ford to provide electric vehicle navigation software on the next-generation SYNC platform for the Mustang Mach-E

Highlights for fiscal year 2019 include:

  • Record consolidated revenue of $3.758 billion, a 12% increase, with fitness, aviation, marine and outdoor collectively increasing 18% over the prior year
  • Gross margin improved to 59.5% compared to 59.1% in the prior year
  • Operating margin improved to 25.2% compared to 23.3% in the prior year
  • Record operating income of $946 million, increasing 21% over the prior year
  • GAAP EPS was $4.99 and pro forma EPS(1) was $4.45, representing 21% growth over the prior year
  • Selected by BMW AG as their lead design and production partner of infotainment modules for the BMW Group, validating Garmin as a tier 1 supplier to the world’s most respected brands
  • Unveiled the Garmin Autoland system for general aviation, designed to safely land the aircraft in the event of a pilot incapacitation
  • Completed several strategic acquisitions to strengthen our product portfolio, including Tacx®, a leading provider of indoor bike trainers
  • Launched the fēnix® 6X Pro Solar, our first wearable featuring solar harvesting technology
  • Named one of America’s Top 5 Best Employers by Forbes

(in thousands, except per share data)

 

13-Weeks Ended

 

52-Weeks Ended

 

 

December 28,

 

December 29,

 

Yr over Yr

 

December 28,

 

December 29,

 

Yr over Yr

 

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

Net sales

 

$

1,102,233

 

 

$

932,108

 

 

 

18

%

 

$

3,757,505

 

 

$

3,347,444

 

 

 

12

%

Fitness

 

 

372,520

 

 

 

277,014

 

 

 

34

%

 

 

1,047,527

 

 

 

858,329

 

 

 

22

%

Aviation

 

 

193,143

 

 

 

158,314

 

 

 

22

%

 

 

735,458

 

 

 

603,459

 

 

 

22

%

Marine

 

 

115,779

 

 

 

94,652

 

 

 

22

%

 

 

508,850

 

 

 

441,560

 

 

 

15

%

Outdoor

 

 

294,819

 

 

 

254,568

 

 

 

16

%

 

 

917,567

 

 

 

809,883

 

 

 

13

%

Auto

 

 

125,972

 

 

 

147,560

 

 

 

-15

%

 

 

548,103

 

 

 

634,213

 

 

 

-14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin %

 

 

58.0

%

 

 

58.9

%

 

 

 

 

 

 

59.5

%

 

 

59.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income %

 

 

25.1

%

 

 

23.9

%

 

 

 

 

 

 

25.2

%

 

 

23.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

 

$

1.89

 

 

$

1.00

 

 

 

89

%

 

$

4.99

 

 

$

3.66

 

 

 

36

%

Pro forma diluted EPS(1)

 

$

1.29

 

 

$

1.02

 

 

 

26

%

 

$

4.45

 

 

$

3.69

 

 

 

21

%

(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:

“2019 was another exciting year of growth thanks to our strong lineup of products and unique innovations,” said Cliff Pemble, president and chief executive officer of Garmin Ltd. “We entered 2020 with a great lineup of recently introduced products with more on the way. We are excited about the future because each business segment offers unique growth opportunities for 2020 and beyond.”

Fitness:

Revenue from the fitness segment grew 34% in the fourth quarter driven by strength in advanced wearables and contributions from Tacx. Gross margin and operating margin were 48% and 20%, respectively, resulting in 26% operating income growth. During the quarter, we announced our support of the Runner’s Alliance, an initiative to fight harassment experienced by women while running.

Aviation:

Revenue from the aviation segment grew 22% in the fourth quarter with contributions from both the aftermarket and OEM categories. Growth was broad-based across multiple product categories, with ADS-B being a major contributor. Gross margin and operating margin were 71% and 33%, respectively, resulting in 18% operating income growth. We expanded the availability of the G1000® NXi upgrade adding both the King Air C90 and the Embraer Phenom 100 to our list of certified aircraft.

Marine:

Revenue from the marine segment grew 22% in the fourth quarter driven by our innovative product lineup of chartplotters, advanced sonars, and the revolutionary new Force trolling motor. Gross margin and operating margin improved to 60% and 19%, respectively, resulting in 154% operating income growth. During the quarter, we expanded our flagship chartplotter line-up with the new GPSMAP Plus series and the ECHOMAP® UHD series.

Outdoor:

Revenue from the outdoor segment grew 16% in the fourth quarter with significant contributions from adventure watches. Gross margin and operating margin were 66% and 39%, respectively, resulting in 21% operating income growth. During the quarter, we announced a global collaboration with World Central Kitchen, providing inReach® satellite communication devices to help support disaster relief with emergency response efforts around the globe. Since its launch in 2011, Garmin inReach has provided remote communication and rescue facilitation in over 4,000 SOS incidents, demonstrating the crucial importance of satellite based two-way messaging wherever our customers need assistance.

Auto:

The auto segment recorded a decline in revenue of 15% during the fourth quarter, primarily due to the ongoing PND market contraction and lower year-over-year OEM sales. Gross margin and operating margin were 47% and 2%, respectively. At the recent Consumer Electronics Show, we announced our new dual-lens Dash Cam Tandem that captures quality video both inside and outside of the vehicle.

Additional Financial Information:

Total operating expenses in the fourth quarter were $363 million, an 11% increase over the prior year. Research and development increased 12%, primarily due to engineering personnel costs and incremental costs associated with acquisitions. Selling, general and administrative expenses increased 10%, driven primarily by personnel related expenses and incremental costs associated with acquisitions. Advertising increased 13%, driven by higher spending in the fitness and outdoor segments.

In the fourth quarter of 2019, we reported a $73 million income tax benefit. Excluding the $118 million income tax benefit due to the revaluation and step-up of certain Switzerland tax assets, our pro forma effective tax rate(1) in the fourth quarter of 2019 was 15.5% compared to 18.0% in the prior year quarter. The decrease in the current quarter pro forma effective tax rate is primarily due to income mix by jurisdiction.

In the fourth quarter of 2019, we generated approximately $208 million of free cash flow(1). We ended the quarter with cash and marketable securities of approximately $2.6 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.

 

2020 Guidance (2):

We expect 2020 revenue of approximately $4.0 billion as growth in fitness, outdoor and marine is partially offset by declines in the auto segment. We expect our full year pro forma EPS will be approximately $4.60 based upon gross margin of approximately 59.2%, operating margin of approximately 23.5% and a full year pro forma effective tax rate of approximately 10.0%. The expected year-over-year decrease in the pro forma tax rate is primarily due to the migration of intellectual property ownership from Switzerland to the United States.

 

 

2020 Guidance

Segment

 

Revenue Growth

Estimates

Revenue

 

~$4.0B

Fitness

 

~10%

Gross Margin

 

~59.2%

Outdoor

 

~10%

Operating Margin

 

~23.5%

Marine

 

~10%

Tax Rate

 

~10.0%

Aviation

 

~0%

EPS

 

~$4.60

Auto

 

~(5%)

(2)

See attached discussion on Forward-looking Financial Measures

 

Dividend Recommendation:

The board of directors intends to recommend to the shareholders for approval at the annual meeting to be held on June 5, 2020, a cash dividend in the amount of $2.44 per share (subject to possible adjustment based on the total amount of the dividend in Swiss Francs as approved at the annual meeting), payable in four equal installments on dates to be determined by the Board. The Board currently anticipates the scheduling of the dividend in four installments as follows:

Dividend Date

 

Record Date

 

$s per share

June 30, 2020

 

June 15, 2020

 

$0.61

September 30, 2020

 

September 15, 2020

 

$0.61

December 31, 2020

 

December 15, 2020

 

$0.61

March 31, 2021

 

March 15, 2021

 

$0.61

 

In addition, the board of directors has established March 31, 2020 as the payment date and March 16, 2020 as the record date for the final dividend installment of $0.57 per share, per the prior approval at the 2019 annual shareholders’ meeting. The first, second and third payments of $0.57 per share were made on June 28, 2019, September 30, 2019, and December 31, 2019, respectively.

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.’s earnings call is as follows:

When:

Wednesday, February 19, 2020 at 10:30 a.m. Eastern

Where:

http://www.garmin.com/en-US/company/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 February 18, 2021 on the Garmin website at www.garmin.com. To access the replay, click on the Investor Relations 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 “would,” “may,” “expects,” “estimates,” “plans,” “intends,” “projects,” and other words or phrases with similar meanings. Any statements regarding the Company’s 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 in 2020, 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 28, 2019 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2019 Form 10-K can be downloaded from https://www.garmin.com/en-US/company/investors/sec/form-10-K/.

Non-GAAP Financial Measures

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, fēnix, GPSMAP, Tacx, G1000, ECHOMAP, Force and inReach, 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.

 

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)

 

 

 

13-Weeks Ended

 

52-Weeks Ended

 

 

December 28,

 

December 29,

 

December 28,

 

December 29,

 

 

2019

 

2018

 

2019

 

2018

Net sales

$

1,102,233

 

$

932,108

 

$

3,757,505

 

$

3,347,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

462,777

 

 

382,942

 

 

1,523,529

 

 

1,367,725

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

639,456

 

 

549,166

 

 

2,233,976

 

 

1,979,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising expense

 

62,648

 

 

55,394

 

 

164,456

 

 

155,394

 

Selling, general and administrative expense

 

138,280

 

 

125,942

 

 

518,568

 

 

478,177

 

Research and development expense

 

162,005

 

 

145,157

 

 

605,366

 

 

567,805

 

Total operating expense

 

362,933

 

 

326,493

 

 

1,288,390

 

 

1,201,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

276,523

 

 

222,673

 

 

945,586

 

 

778,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

13,069

 

 

14,837

 

 

52,817

 

 

47,147

 

Foreign currency losses

 

(4,230

)

 

(4,211

)

 

(16,799

)

 

(7,616

)

Other income (expense)

 

2,051

 

 

(1,426

)

 

5,618

 

 

5,373

 

Total other income (expense)

 

10,890

 

 

9,200

 

 

41,636

 

 

44,904

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

287,413

 

 

231,873

 

 

987,222

 

 

823,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) provision

 

(73,379

)

 

41,723

 

 

34,736

 

 

129,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

360,792

 

$

190,150

 

$

952,486

 

$

694,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.90

 

$

1.01

 

$

5.01

 

$

3.68

 

Diluted

$

1.89

 

$

1.00

 

$

4.99

 

$

3.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

190,165

 

 

188,878

 

 

189,931

 

 

188,635

 

Diluted

 

191,225

 

 

190,177

 

 

190,899

 

 

189,734

 

 

Garmin Ltd. And Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share information)

 

 

 

December 28,

2019

 

December 29,

2018

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,027,567

 

 

$

1,201,732

 

Marketable securities

 

 

376,463

 

 

 

182,989

 

Accounts receivable, net

 

 

706,763

 

 

 

569,833

 

Inventories

 

 

752,908

 

 

 

561,840

 

Deferred costs

 

 

25,105

 

 

 

28,462

 

Prepaid expenses and other current assets

 

 

169,044

 

 

 

120,512

 

Total current assets

 

 

3,057,850

 

 

 

2,665,368

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

728,921

 

 

 

663,527

 

Operating lease right-of-use assets

 

 

63,589

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

 

71

 

 

 

73

 

Marketable securities

 

 

1,205,475

 

 

 

1,330,123

 

Deferred income taxes

 

 

268,518

 

 

 

176,959

 

Noncurrent deferred costs

 

 

23,493

 

 

 

29,473

 

Intangible assets, net

 

 

659,629

 

 

 

417,080

 

Other assets

 

 

159,253

 

 

 

100,255

 

Total assets

 

$

6,166,799

 

 

$

5,382,858

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

240,831

 

 

$

204,985

 

Salaries and benefits payable

 

 

128,426

 

 

 

113,087

 

Accrued warranty costs

 

 

39,758

 

 

 

38,276

 

Accrued sales program costs

 

 

112,578

 

 

 

90,388

 

Deferred revenue

 

 

94,562

 

 

 

96,372

 

Accrued royalty costs

 

 

15,401

 

 

 

24,646

 

Accrued advertising expense

 

 

35,142

 

 

 

31,657

 

Other accrued expenses

 

 

95,060

 

 

 

69,777

 

Income taxes payable

 

 

56,913

 

 

 

51,642

 

Dividend payable

 

 

217,262

 

 

 

200,483

 

Total current liabilities

 

 

1,035,933

 

 

 

921,313

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

114,754

 

 

 

92,944

 

Noncurrent income taxes

 

 

105,771

 

 

 

127,211

 

Noncurrent deferred revenue

 

 

67,329

 

 

 

76,566

 

Noncurrent operating lease liabilities

 

 

49,238

 

 

 

 

Other liabilities

 

 

278

 

 

 

1,850

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 190,686 shares outstanding at December 28, 2019; and 189,461 shares outstanding at December 29, 2018

 

 

17,979

 

 

 

17,979

 

Additional paid-in capital

 

 

1,835,622

 

 

 

1,823,638

 

Treasury stock

 

 

(345,040

)

 

 

(397,692

)

Retained earnings

 

 

3,229,061

 

 

 

2,710,619

 

Accumulated other comprehensive income

 

 

55,874

 

 

 

8,430

 

Total stockholders’ equity

 

 

4,793,496

 

 

 

4,162,974

 

Total liabilities and stockholders’ equity

 

$

6,166,799

 

 

$

5,382,858

 

 

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

52-Weeks Ended

 

 

December 28,

2019

 

December 29,

2018

Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

952,486

 

 

$

694,080

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

71,921

 

 

 

64,798

 

Amortization

 

 

34,254

 

 

 

31,396

 

Gain on sale of property and equipment

 

 

(233

)

 

 

(479

)

Unrealized foreign currency losses

 

 

18,663

 

 

 

13,790

 

Deferred income taxes

 

 

(88,358

)

 

 

38,978

 

Stock compensation expense

 

 

63,400

 

 

 

56,391

 

Realized (gains) losses on marketable securities

 

 

(799

)

 

 

827

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable, net of allowance for doubtful accounts

 

 

(123,401

)

 

 

7,290

 

Inventories

 

 

(170,169

)

 

 

(57,737

)

Other current and non-current assets

 

 

(86,073

)

 

 

7,358

 

Accounts payable

 

 

26,192

 

 

 

40,628

 

Other current and non-current liabilities

 

 

36,660

 

 

 

(1,323

)

Deferred revenue

 

 

(11,032

)

 

 

(17,208

)

Deferred costs

 

 

9,335

 

 

 

5,611

 

Income taxes payable

 

 

(34,297

)

 

 

35,120

 

Net cash provided by operating activities

 

 

698,549

 

 

 

919,520

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(118,031

)

 

 

(155,755

)

Proceeds from sale of property and equipment

 

 

529

 

 

 

1,600

 

Purchase of intangible assets

 

 

(2,377

)

 

 

(4,600

)

Purchase of marketable securities

 

 

(789,352

)

 

 

(403,181

)

Redemption of marketable securities

 

 

758,774

 

 

 

283,603

 

Acquisitions, net of cash acquired

 

 

(300,289

)

 

 

(29,170

)

Net cash used in investing activities

 

 

(450,746

)

 

 

(307,503

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Dividends

 

 

(417,264

)

 

 

(296,148

)

Proceeds from issuance of treasury stock related to equity awards

 

 

27,122

 

 

 

26,642

 

Purchase of treasury stock related to equity awards

 

 

(25,886

)

 

 

(16,655

)

Net cash used in financing activities

 

 

(416,028

)

 

 

(286,161

)

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(5,942

)

 

 

(15,810

)

 

 

 

 

 

 

 

 

 

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

 

 

(174,167

)

 

 

310,046

 

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

 

 

1,201,805

 

 

 

891,759

 

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

 

$

1,027,638

 

 

$

1,201,805

 

 

Garmin Ltd. And Subsidiaries

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

(In thousands)

 

 

 

Reportable Segments

 

 

Fitness

 

Outdoor

 

Aviation

 

Auto

 

Marine

 

Total

13-Weeks Ended December 28, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

372,520

$

294,819

$

193,143

$

125,972

$

115,779

$

1,102,233

Gross profit

 

179,799

 

194,601

 

137,537

 

58,584

 

68,935

 

639,456

Operating income

 

73,490

 

115,701

 

62,778

 

2,891

 

21,663

 

276,523

 

 

 

 

 

 

 

 

 

 

 

 

 

13-Weeks Ended December 29, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

277,014

$

254,568

$

158,314

$

147,560

$

94,652

$

932,108

Gross profit

 

145,291

 

169,425

 

116,266

 

63,405

 

54,779

 

549,166

Operating income

 

58,446

 

95,798

 

53,005

 

6,888

 

8,536

 

222,673

 

 

 

 

 

 

 

 

 

 

 

 

 

52-Weeks Ended December 28, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,047,527

$

917,567

$

735,458

$

548,103

$

508,850

$

3,757,505

Gross profit

 

532,604

 

598,443

 

543,385

 

256,595

 

302,949

 

2,233,976

Operating income

 

191,858

 

334,041

 

252,943

 

56,868

 

109,876

 

945,586

 

 

 

 

 

 

 

 

 

 

 

 

 

52 -Weeks Ended December 29, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

858,329

$

809,883

$

603,459

$

634,213

$

441,560

$

3,347,444

Gross profit

 

471,764

 

528,254

 

450,152

 

270,793

 

258,756

 

1,979,719

Operating income

 

181,745

 

290,510

 

204,746

 

37,998

 

63,344

 

778,343

 

In the first quarter of fiscal 2019, the methodology used to allocate certain selling, general, and administrative expenses to the segments was refined. The Company’s composition of segments did not change. Prior year amounts are presented above as they were originally reported. For comparative purposes, we estimate segment operating income for the 13 weeks ended December 29, 2018 would have been approximately $5 million less for the aviation segment, approximately $1 million more for the marine segment, $4 million more for the outdoor segment, and not significantly different for the fitness and auto segments. We estimate segment operating income for the 52 weeks ended December 29, 2018 would have been approximately $18 million less for the aviation segment, approximately $11 million more for the marine segment, approximately $7 million more for the outdoor segment, and not significantly different for the fitness and auto segments.

Garmin Ltd. And Subsidiaries

Net Sales by Geography (Unaudited)

(In thousands)

 

 

 

13-Weeks Ended

 

 

52-Weeks Ended

 

 

December 28,

 

 

December 29,

 

 

Yr over Yr

 

 

December 28,

 

 

December 29,

 

 

Yr over Yr

 

 

2019

 

 

2018

 

 

Change

 

 

2019

 

 

2018

 

 

Change

Net sales

 

$

1,102,233

 

 

$

932,108

 

 

18

%

 

 

$

3,757,505

 

 

$

3,347,444

 

 

12

%

Americas

 

 

528,362

 

 

 

443,386

 

 

19

%

 

 

 

1,817,770

 

 

 

1,596,716

 

 

14

%

EMEA

 

 

407,908

 

 

 

342,853

 

 

19

%

 

 

 

1,350,533

 

 

 

1,204,969

 

 

12

%

APAC

 

 

165,963

 

 

 

145,869

 

 

14

%

 

 

 

589,202

 

 

 

545,759

 

 

8

%

 

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 2018, 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

 

52-Weeks Ended

 

 

December 28,

 

December 28,

 

 

2019

 

2019

 

 

$

 

ETR(1)

 

$

 

ETR(1)

U.S GAAP income tax (benefit) provision

 

$

(73,379

)

 

 

(25.5

)%

 

$

34,736

 

 

 

3.5

%

Pro forma discrete tax item:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Switzerland deferred tax assets(2)

 

 

117,989

 

 

 

 

 

 

 

117,989

 

 

 

 

 

Pro forma income tax provision

 

$

44,610

 

 

 

15.5

%

 

$

152,725

 

 

 

15.5

%

(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 fourth quarter 2019, a $118 million income tax benefit was recognized resulting from the revaluation and step-up of certain Switzerland tax assets as a result of the enactment of Switzerland Federal and Schaffhausen cantonal tax reform and related transitional measures. This impact 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 uncertain tax position reserves, amounting to approximately $28.9 million and $31.0 million for the 52-weeks ended December 28, 2019 and December 29, 2018, respectively, have not been included as pro forma adjustments in the above presentation of pro forma income tax provision as such items tend to be more recurring in nature.

Contacts

Investor Relations Contact:
Teri Seck
+1 913/397-8200
investor.relations@garmin.com

Media Relations Contact:
Carly Hysell
+1 913/397-8200
media.relations@garmin.com

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Author: dmnnewswire