Garmin announces fourth quarter and fiscal year 2021 results

Rhea-AI Summary

Garmin Ltd. (NYSE: GRMN) reported a record revenue of $4.98 billion for the fiscal year 2021, marking a 19% increase year-over-year. The fourth quarter revenue reached $1.39 billion, up 3% compared to the previous year. Despite strong performance, operating income fell 15% in Q4 to $315 million. Gross margins stood at 58.0%, while operating margins decreased from 25.2% to 24.5% for the year. Garmin anticipates 2022 revenue to be around $5.5 billion, suggesting a 10% growth, with pro forma EPS projected at $5.90. The company also announced a dividend increase alongside positive recognition for several product innovations.

Positive

• Record fiscal year 2021 revenue of $4.98 billion, up 19% YoY.
• Sixth consecutive year of revenue growth with double-digit increases across all segments.
• 2022 guidance projects revenue of approximately $5.5 billion, a 10% increase.
• Pro forma EPS expected to rise to $5.90 in 2022, reflecting potential growth.

Negative

• Operating income decreased by 15% in Q4 2021 compared to Q4 2020.
• Gross margin declined from 59.3% in 2020 to 58.0% in 2021.
• Operating margin also decreased from 25.2% to 24.5% over the same period.

Company reports record full year revenue and operating income and proposes dividend increase

SCHAFFHAUSEN, Switzerland--(BUSINESS WIRE)-- Garmin^® Ltd. (NYSE: GRMN), today announced results for the fourth quarter and fiscal year ended December 25, 2021.

Highlights for fourth quarter 2021 include:

• Record consolidated revenue of $1.39 billion, a 3% increase over the prior year quarter with three of our segments posting strong double digit growth
• Gross and operating margins were 55.5% and 22.6%, respectively
• Operating income of $315 million, a 15% decrease compared to the prior year quarter
• GAAP EPS was $1.48 and pro forma EPS⁽¹⁾ was $1.55
• Garmin Descent Mk2i dive computer and Descent T1 transmitter named one of 2021’s greatest innovations by Popular Science
• Named a supplier of the year by Embraer for seventh consecutive year
• Garmin Surround View Camera System was awarded the prestigious DAME design award
• Recently announced the acquisition of Vesper Marine, a leading provider of marine communication equipment and services
• Introduced the new Garmin DriveSmart series of portable car navigators with a range of large displays up to 8”

Highlights for fiscal year 2021 include:

• Sixth consecutive year of revenue growth with each of our five segments posting double digit growth over the prior year
• Record consolidated revenue of $4.98 billion, a 19% increase over the prior year
• Gross margin of 58.0% compared to 59.3% in the prior year
• Operating margin of 24.5% compared to 25.2% in the prior year
• Record operating income of $1.22 billion, increasing 16% over the prior year
• GAAP EPS was $5.61 and pro forma EPS⁽¹⁾ was $5.82, representing 13% growth over the prior year pro forma EPS

(In thousands, except per share information)		13-Weeks Ended												52-Weeks Ended
		December 25,				December 26,				YoY				December 25,				December 26,				YoY
		2021				2020				Change				2021				2020				Change
Net sales		$	1,391,589			$	1,351,405				3	%		$	4,982,795			$	4,186,573				19	%
Fitness			470,146				470,811				(0	)%			1,533,788				1,317,498				16	%
Outdoor			378,218				411,935				(8	)%			1,281,933				1,128,081				14	%
Aviation			177,582				156,969				13	%			712,468				622,820				14	%
Marine			196,454				171,579				14	%			875,151				657,848				33	%
Auto			169,189				140,111				21	%			579,455				460,326				26	%
Gross margin %			55.5	%			58.5	%							58.0	%			59.3	%
Operating income %			22.6	%			27.5	%							24.5	%			25.2	%
GAAP diluted EPS		$	1.48			$	1.73				(14	)%		$	5.61			$	5.17				9	%
Pro forma diluted EPS (1)		$	1.55			$	1.73				(10	)%		$	5.82			$	5.14				13	%
(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:

“2021 was another remarkable year as demand for our products led to strong double digit annual revenue growth in each of our five segments,” said Cliff Pemble, President and CEO of Garmin. “We are entering 2022 with a great lineup of recently introduced products and have more exciting product introductions planned throughout the year. I am very proud of what we have accomplished in 2021 and look forward to the opportunities and challenges of the new year.”

Fitness:

Revenue from the fitness segment was flat in the fourth quarter, with growth in advanced wearable products offset by reduced sales of cycling products. Gross margin and operating margins were 49% and 22%, respectively, resulting in $104 million of operating income. During the quarter, we announced multiyear sponsorship agreements at both the high school and collegiate levels to showcase the power and utility of our running watches. We also recently released our 2021 Connect Fitness Report which shows double digit growth in nearly every activity category, demonstrating the unique active lifestyle focus of our customer base.

Outdoor:

Revenue from the outdoor segment decreased 8% in the fourth quarter primarily due to component constraints that limited the number of orders we could fulfill for our traditional handhelds and dog products. Gross margin and operating margins were 65% and 37%, respectively, resulting in $142 million of operating income. The Garmin Descent Mk2i dive computer and Descent T1 transmitter featuring our revolutionary SubWave sonar-based communication were named one of 2021’s greatest innovations by Popular Science.

Aviation:

Revenue from the aviation segment grew 13% in the fourth quarter primarily driven by the OEM category. Gross margin and operating margins were 73% and 25%, respectively, resulting in $45 million of operating income. During the quarter the G3000 integrated flight deck was selected by Heart Aerospace for the all-electric ES-19 regional airliner. We also announced additional certifications for our GFC 500/600 autopilot, bringing the performance and safety enhancing benefits of our flight control technology to more aircraft models. Also in the quarter, Embraer presented Garmin with its seventh consecutive Supplier of the Year award. Over the past decade, Embraer has presented Garmin with a total of 12 supplier awards across various categories, including: Electric and Electronics Systems, Technical Support to Operators, Electro- Mechanical Systems, and Material Support to Operator, recognizing our achievement in designing, manufacturing, and supporting the most innovative flight deck solutions.

Marine:

Revenue from the marine segment grew 14% in the fourth quarter with growth across multiple categories led by strong demand for our chartplotters. Gross margin and operating margins were 54% and 20%, respectively, resulting in $39 million of operating income. During the quarter, we launched the new GPSMAP 79 marine handheld series, equipping mariners with easy-to-use navigation tools in the palm of their hand. We also launched the new GMR Fantom range, the most powerful solid-state dome radars in their class. These high-powered radars offer a broad range from 20 feet to 48 nautical miles, improved target detection and features to enhance situational awareness on the water. Also during the quarter, our Surround View Camera System was named the 2021 DAME Design award winner as the industry first intelligent camera system delivering unprecedented situational awareness and convenience on the water.

Auto:

Revenue from the auto segment grew 21% during the fourth quarter driven by growth in both auto OEM programs and consumer auto products. Gross margin was 36%, and we recorded an operating loss of $15 million in the quarter driven by ongoing investments in auto OEM programs. During the quarter, we began shipments of the 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 fourth quarter were $457 million, a 9% increase over the prior year. Research and development increased by 11%, primarily due to engineering personnel costs. Selling, general and administrative expenses increased 10%, driven primarily by personnel related expenses and information technology costs. Advertising expenses were consistent with the prior year quarter.

The effective tax rate in the fourth quarter of 2021 was 7.4% compared to the GAAP effective tax rate of 14.8% and pro forma effective tax rate⁽¹⁾ of 12.0% in the prior year quarter. The year-over-year decrease in the pro forma effective tax rate is primarily due to uncertain tax position reserves recorded in the prior year.

In the fourth quarter of 2021, we generated approximately $49 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 $3.1 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.

2022 Fiscal Year Guidance⁽²⁾:

We expect full year 2022 revenue of approximately $5.5 billion, an increase of approximately 10% over 2021. We expect our full year pro forma EPS to be approximately $5.90 based upon gross margin of approximately 57.5%, operating margin of approximately 22.8% and pro forma effective tax rate of approximately 10.5%.

			2022 Guidance
Revenue			$5.5B
Gross Margin			57.5%
Operating Margin			22.8%
Pro forma Effective Tax Rate			10.5%
Pro forma EPS			$5.90
(2) All amounts and %s in the above 2022 Guidance table are approximate. Also, 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 10, 2022, a cash dividend in the amount of $2.92 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, 2022		June 20, 2022		$0.73
September 30, 2022		September 15, 2022		$0.73
December 30, 2022		December 15, 2022		$0.73
March 31, 2023		March 15, 2023		$0.73

In addition, the board has established March 31, 2022 as the payment date and March 15, 2022 as the record date for the final dividend installment of $0.67 per share, per the prior approval at the 2021 annual shareholders’ meeting. The first, second and third payments of $0.67 per share were made on June 30, 2021, September 30, 2021, and December 31, 2021, respectively.

Webcast Information/Forward-Looking Statements:

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

When: Wednesday, February 16, 2022 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 February 15, 2023 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 2022 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, 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 25, 2021 filed by Garmin with the Securities and Exchange Commission (Commission file number 001-41118). A copy of Garmin’s 2021 Form 10-K 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 December 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 and the Garmin delta, G3000 and GPSMAP are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Drive, DriveSmart, Descent, GFC, GMR Fantom and SubWave 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								52-Weeks Ended
		December 25,				December 26,				December 25,				December 26,
		2021				2020				2021				2020
Net sales		$	1,391,589			$	1,351,405			$	4,982,795			$	4,186,573
Cost of goods sold			619,484				560,422				2,092,336				1,705,237
Gross profit			772,105				790,983				2,890,459				2,481,336
Advertising expense			61,124				61,135				171,829				151,166
Selling, general and administrative expense			174,090				158,910				659,986				570,245
Research and development expense			221,772				199,672				840,024				705,685
Total operating expenses			456,986				419,717				1,671,839				1,427,096
Operating income			315,119				371,266				1,218,620				1,054,240
Other income (expense):
Interest income			7,005				6,744				28,573				37,002
Foreign currency (losses) gains			(14,642	)			12,627				(45,263	)			2,825
Other income			1,355				828				4,866				9,343
Total other income (expense)			(6,282	)			20,199				(11,824	)			49,170
Income before income taxes			308,837				391,465				1,206,796				1,103,410
Income tax provision			22,702				57,918				124,596				111,086
Net income		$	286,135			$	333,547			$	1,082,200			$	992,324
Net income per share:
Basic		$	1.49			$	1.74			$	5.63			$	5.19
Diluted		$	1.48			$	1.73			$	5.61			$	5.17
Weighted average common shares outstanding:
Basic			192,353				191,278				192,180				191,085
Diluted			193,306				192,303				193,043				191,895

Garmin Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except per share information)
		December 25,				December 26,
		2021				2020
Assets
Current assets:
Cash and cash equivalents		$	1,498,058			$	1,458,442
Marketable securities			347,980				387,642
Accounts receivable, net			843,445				849,469
Inventories			1,227,609				762,084
Deferred costs			15,961				20,145
Prepaid expenses and other current assets			328,719				191,569
Total current assets			4,261,772				3,669,351
Property and equipment, net			1,067,478				855,539
Operating lease right-of-use assets			89,457				94,626
Noncurrent marketable securities			1,268,698				1,131,175
Deferred income tax assets			260,205				245,455
Noncurrent deferred costs			12,361				16,510
Intangible assets, net			791,073				828,566
Other noncurrent assets			103,383				190,151
Total assets		$	7,854,427			$	7,031,373
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	370,048			$	258,885
Salaries and benefits payable			211,371				181,937
Accrued warranty costs			45,467				42,643
Accrued sales program costs			121,514				109,891
Other accrued expenses			225,988				181,767
Deferred revenue			87,654				86,865
Income taxes payable			128,083				68,585
Dividend payable			258,023				233,644
Total current liabilities			1,448,148				1,164,217
Deferred income tax liabilities			117,595				116,844
Noncurrent income taxes payable			62,539				92,810
Noncurrent deferred revenue			41,618				49,934
Noncurrent operating lease liabilities			70,044				75,958
Other noncurrent liabilities			324				15,494
Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 192,608 shares outstanding at December 25, 2021; and 191,571 shares outstanding at December 26, 2020			17,979				17,979
Additional paid-in capital			1,960,722				1,880,354
Treasury stock			(303,114	)			(320,016	)
Retained earnings			4,320,737				3,754,372
Accumulated other comprehensive income			117,835				183,427
Total stockholders’ equity			6,114,159				5,516,116
Total liabilities and stockholders’ equity		$	7,854,427			$	7,031,373

Garmin Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
		52-Weeks Ended
		December 25,				December 26,
		2021				2020
Operating Activities:
Net income		$	1,082,200			$	992,324
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			103,498				78,121
Amortization			51,320				48,594
Loss (gain) on sale of property and equipment			298				(1,799	)
Unrealized foreign currency losses (gains)			36,385				(9,873	)
Deferred income taxes			(5,368	)			6,931
Stock compensation expense			92,522				80,885
Realized gains on marketable securities			(622	)			(1,392	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts			(19,106	)			(108,859	)
Inventories			(476,454	)			28,726
Other current and noncurrent assets			(38,004	)			(33,690	)
Accounts payable			108,946				1,447
Other current and noncurrent liabilities			70,007				87,761
Deferred revenue			(7,377	)			(25,211	)
Deferred costs			8,288				11,973
Income taxes			5,894				(20,671	)
Net cash provided by operating activities			1,012,427				1,135,267
Investing activities:
Purchases of property and equipment			(307,645	)			(185,401	)
Proceeds from sale of property and equipment			35				1,977
Purchase of intangible assets			(1,942	)			(2,065	)
Purchase of marketable securities			(1,508,712	)			(1,052,640	)
Redemption of marketable securities			1,363,070				1,126,253
Acquisitions, net of cash acquired			(20,175	)			(148,648	)
Net cash used in investing activities			(475,369	)			(260,524	)
Financing activities:
Dividends			(491,457	)			(450,631	)
Proceeds from issuance of treasury stock related to equity awards			35,733				15,201
Purchase of treasury stock related to equity awards			(30,985	)			(26,330	)
Net cash used in financing activities			(486,709	)			(461,760	)
Effect of exchange rate changes on cash and cash equivalents			(10,254	)			18,127
Net increase in cash, cash equivalents, and restricted cash			40,095				431,110
Cash, cash equivalents, and restricted cash at beginning of year			1,458,748				1,027,638
Cash, cash equivalents, and restricted cash at end of year		$	1,498,843			$	1,458,748

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 December 25, 2021
Net sales		$	470,146			$	378,218			$	177,582			$	196,454			$	169,189			$	93,143			$	76,046			$	1,391,589
Gross profit			231,560				244,482				130,445				105,170				60,448				40,257				20,191				772,105
Operating income (loss)			104,085				141,747				44,800				39,158				(14,671	)			10,213				(24,884	)			315,119
13-Weeks Ended December 26, 2020
Net sales		$	470,811			$	411,935			$	156,969			$	171,579			$	140,111			$	78,552			$	61,559			$	1,351,405
Gross profit			250,603				270,627				114,237				96,347				59,169				41,516				17,653				790,983
Operating income (loss)			128,809				179,028				33,718				41,530				(11,819	)			15,836				(27,655	)			371,266
52-Weeks Ended December 25, 2021
Net sales		$	1,533,788			$	1,281,933			$	712,468			$	875,151			$	579,455			$	324,731			$	254,724			$	4,982,795
Gross profit			813,325				834,837				519,821				495,310				227,166				153,825				73,341				2,890,459
Operating income (loss)			372,575				480,777				191,775				244,199				(70,706	)			45,603				(116,309	)			1,218,620
52-Weeks Ended December 26, 2020
Net sales		$	1,317,498			$	1,128,081			$	622,820			$	657,848			$	460,326			$	275,493			$	184,833			$	4,186,573
Gross profit			697,539				739,777				453,008				384,450				206,562				139,864				66,698				2,481,336
Operating income (loss)			318,884				441,085				137,203				175,724				(18,656	)			41,464				(60,120	)			1,054,240

Garmin Ltd. and Subsidiaries
Net Sales by Geography
(In thousands)
		13-Weeks Ended												52-Weeks Ended
		December 25,				December 26,				YoY				December 25,				December 26,				YoY
		2021				2020				Change				2021				2020				Change
Net sales		$	1,391,589			$	1,351,405			3%				$	4,982,795			$	4,186,573			19%
Americas			626,099				595,720			5%					2,349,515				1,968,080			19%
EMEA			528,053				536,822			(2)%					1,858,907				1,579,749			18%
APAC			237,437				218,863			8%					774,373				638,744			21%
EMEA - Europe, Middle East and Africa
APAC - Asia Pacific and Australian Continent

Changes in Expense Classification and Segment Allocation Methodologies

Beginning with reports filed in the first quarter of fiscal 2022, the Company will reflect a refined methodology used in classifying certain indirect costs in accordance with the way the Company's management will use the information in decision making, which we believe will provide a more meaningful representation of costs incurred to support research and development activities. Future reports will also reflect a refined methodology used to allocate certain selling, general, and administrative expenses to the segments in a more direct manner to provide a more meaningful representation of segment profit or loss.

These changes in classification and allocation had no effect on the Company's consolidated operating or net income or on the Company's composition of operating segments and reportable segments. The Company expects to report its financial results in accordance with these changes beginning with the Company's first quarter 2022 Form 10-Q and will recast prior periods to conform to the revised presentation.

We estimate the expense classification change will result in a decrease to research and development expense of approximately $61 million, with a corresponding increase to selling, general, and administrative expenses, for the recast fiscal year ended December 25, 2021.

We estimate the segment allocation change will result in the following impacts to segment operating income for the recast fiscal year ended December 25, 2021:

		52-Weeks Ended December 25, 2021 (In millions)
										Auto
		Fitness		Outdoor		Aviation		Marine		Total Auto		Consumer Auto		Auto OEM		Total
Operating income (decrease) increase		$ (13)		$ (5)		$ 1		$ 6		$ 11		$ 3		$ 8		$ —

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 thousands, except ETR information)		13-Weeks Ended																52-Weeks Ended
		December 25,								December 26,								December 25,								December 26,
		2021								2020								2021								2020
		$				ETR(1)				$				ETR(1)				$				ETR(1)				$				ETR(1)
U.S GAAP income tax provision		$	22,702			7.4%				$	57,918			14.8%				$	124,596			10.3%				$	111,086			10.1%
Pro forma discrete tax items:
Uncertain tax reserve release (2)																											14,308
Switzerland deferred tax assets (3)											(11,016	)															(11,016	)
Pro forma income tax provision		$	22,702			7.4%				$	46,902			12.0%				$	124,596			10.3%				$	114,378			10.4%
(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.
(3) Certain Switzerland deferred tax assets related to the enactment of Switzerland Federal and Schaffhausen cantonal tax reform and related transitional measures were revalued in the fourth quarter of 2020 resulting in $11.0 million income tax expense. The impact of the revaluation of these Switzerland deferred tax assets 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								52-Weeks Ended
		December 25,				December 26,				December 25,				December 26,
		2021				2020				2021				2020
GAAP net income		$	286,135			$	333,547			$	1,082,200			$	992,324
Foreign currency gains / losses (1)			14,642				(12,627	)			45,263				(2,825	)
Tax effect of foreign currency gains / losses (2)			(1,076	)			1,513				(4,673	)			293
Pro forma discrete tax items (3)							11,016								(3,292	)
Pro forma net income		$	299,701			$	333,449			$	1,122,790			$	986,500
GAAP net income per share:
Basic		$	1.49			$	1.74			$	5.63			$	5.19
Diluted		$	1.48			$	1.73			$	5.61			$	5.17
Pro forma net income per share:
Basic		$	1.56			$	1.74			$	5.84			$	5.16
Diluted		$	1.55			$	1.73			$	5.82			$	5.14
Weighted average common shares outstanding:
Basic			192,353				191,278				192,180				191,085
Diluted			193,306				192,303				193,043				191,895
(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 7.4% and 10.3% for the 13-weeks and fiscal year ended December 25, 2021, respectively, and the pro forma effective tax rate of 12.0% and 10.4% for the 13-weeks and fiscal year ended December 26, 2020, respectively.
(3) The 2020 discrete tax items are discussed in the pro forma effective tax rate section above.

Free cash flow

Management believes that free cash flow is an important liquidity 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 operations and allows more accurate comparisons of the Company’s results between periods. 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.

(In thousands)		13-Weeks Ended								52-Weeks Ended
		December 25,				December 26,				December 25,				December 26,
		2021				2020				2021				2020
Net cash provided by operating activities		$	168,962			$	435,818			$	1,012,427			$	1,135,267
Less: purchases of property and equipment			(119,685	)			(48,329	)			(307,645	)			(185,401	)
Free Cash Flow		$	49,277			$	387,489			$	704,782			$	949,866

Forward-looking Financial Measures

The forward-looking financial measures in our 2022 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 $0.21 per share for the 52-weeks ended December 25, 2021.

At this time, management is unable to determine whether or not significant discrete tax items will occur in fiscal 2022 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220216005424/en/

Investor Relations Contact:

Teri Seck

913/397-8200

investor.relations@garmin.com

Media Relations Contact:

Krista Klaus

913/397-8200

media.relations@garmin.com

Source: Garmin Ltd.

FAQ

What were Garmin's fourth quarter results for 2021?

Garmin reported a fourth quarter revenue of $1.39 billion, a 3% increase year-over-year.

How did Garmin perform in fiscal year 2021?

Garmin achieved a record revenue of $4.98 billion for fiscal year 2021, a 19% increase over the prior year.

What is Garmin's guidance for fiscal year 2022?

Garmin expects approximately $5.5 billion in revenue for 2022, estimating a 10% growth.

What was Garmin's GAAP EPS for 2021?

Garmin reported a GAAP EPS of $5.61 for the fiscal year ended December 25, 2021.

What was the operating income for Garmin in Q4 2021?

Garmin's operating income in the fourth quarter of 2021 was $315 million, a 15% decrease compared to Q4 2020.