Garmin announces fourth quarter and fiscal year 2022 results
Garmin Ltd. (NYSE: GRMN) reported its fourth quarter 2022 results, revealing a 6% decline in consolidated revenue to $1.31 billion. The company achieved a gross margin increase to 57.0% despite an operating income decrease of 15% to $267 million. For fiscal year 2022, Garmin's revenue totaled $4.86 billion, down 2%, influenced by currency fluctuations. Notably, the aviation segment grew by 27% in Q4, while the fitness segment faced a 28% revenue drop. Garmin projects a revenue increase to approximately $5.00 billion for 2023 with a pro forma EPS of $5.15.
- Record revenue in Outdoor, Aviation, and Marine segments.
- Expansion of gross margin to 57.0% in Q4 2022.
- FDA approval for a clinically-validated ECG application.
- 6% decrease in consolidated revenue in Q4 2022.
- 28% decline in fitness segment revenue for Q4 2022.
- Operating income dropped 15% in Q4 2022.
Company reports record full year revenue for three reportable segments
SCHAFFHAUSEN, Switzerland, Feb. 22, 2023 /PRNewswire/ -- Garmin® Ltd. (NYSE: GRMN), today announced results for the fourth quarter ended December 31, 2022.
Highlights for fourth quarter 2022 include:
- Consolidated revenue of
$1.31 billion , a6% decrease compared to the prior year quarter - Gross margin expanded to
57.0% from55.5% in the prior year quarter - Operating margin was
20.5% compared to22.6% in the prior year quarter - Operating income was
$267 million , a15% decrease compared to the prior year quarter - GAAP EPS was
$1.53 and pro forma EPS(1) was$1.35 - Launched Bounce™, our first LTE-connected kids smartwatch
- G3000® tandem integrated flight deck was selected by L3Harris for the Armed Overwatch program
- Recognized by the BMW Group with a 2022 Supplier Innovation Award in the customer experience category for the BMW 7-series Theatre Screen rear-seat entertainment system
- Enduro™ 2, MARQ® Adventurer, and dēzl® OTR 1010 all received the 2023 Honoree title for the CES Innovation Awards
- Recently received FDA approval for a clinically-validated App that records ECG information and detects certain arrhythmias in combination with the Venu® 2 Plus
Highlights for fiscal year 2022 include:
- Consolidated revenue of
$4.86 billion , a2% decrease compared to the prior year, was unfavorably impacted by approximately$228 million due to the year-over-year strengthening of the U.S. Dollar relative to other major currencies - Outdoor, Aviation, and Marine segments each posted record full year revenue
- Gross margin of
57.7% compared to58.0% in the prior year - Operating margin of
21.1% compared to24.5% in the prior year - Operating income of
$1.03 billion , a16% decrease compared to the prior year - GAAP EPS was
$5.04 and pro forma EPS(1) was$5 .13
(In thousands, except per share information) | 14-Weeks | 13-Weeks | 53-Weeks | 52-Weeks | ||||||||||||||||||||
December 31, | December 25, | YoY | December 31, | December 25, | YoY | |||||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||
Net sales | $ | 1,306,356 | $ | 1,391,589 | (6) | % | $ | 4,860,286 | $ | 4,982,795 | (2) | % | ||||||||||||
Fitness | 336,553 | 470,146 | (28) | % | 1,109,419 | 1,533,788 | (28) | % | ||||||||||||||||
Outdoor | 388,259 | 378,218 | 3 | % | 1,495,167 | 1,281,933 | 17 | % | ||||||||||||||||
Aviation | 225,251 | 177,582 | 27 | % | 792,799 | 712,468 | 11 | % | ||||||||||||||||
Marine | 210,614 | 196,454 | 7 | % | 903,983 | 875,151 | 3 | % | ||||||||||||||||
Auto | 145,679 | 169,189 | (14) | % | 558,918 | 579,455 | (4) | % | ||||||||||||||||
Gross margin % | 57.0 | % | 55.5 | % | 57.7 | % | 58.0 | % | ||||||||||||||||
Operating income % | 20.5 | % | 22.6 | % | 21.1 | % | 24.5 | % | ||||||||||||||||
GAAP diluted EPS | $ | 1.53 | $ | 1.48 | 3 | % | $ | 5.04 | $ | 5.61 | (10) | % | ||||||||||||
Pro forma diluted EPS (1) | $ | 1.35 | $ | 1.55 | (13) | % | $ | 5.13 | $ | 5.82 | (12) | % | ||||||||||||
(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:
"Our performance in 2022 was solid even as we faced increasing headwinds affecting the business environment and consumer behaviors," said Cliff Pemble, President and CEO of Garmin. "We are entering 2023 with a strong product lineup, and many more product launches are planned throughout the year. I am very proud of what we accomplished in 2022 and look forward to the opportunities and challenges ahead."
Fitness:
Revenue from the fitness segment decreased
Outdoor:
Revenue from the outdoor segment grew
Aviation:
Revenue from the aviation segment grew
Marine:
Revenue from the marine segment grew
Auto:
Revenue from the auto segment decreased
Change in Operating Segments:
In January 2023, the Company combined the consumer auto operating segment with the outdoor operating segment. As a result, beginning with reports filed in the first quarter of fiscal 2023, the Company's operating segments will be fitness, outdoor, aviation, marine, and auto OEM. Prior periods will be recast to conform to the revised composition (see Appendix A for the recast presentation).
Additional Financial Information:
Total operating expenses in the fourth quarter were
The effective tax rate in the fourth quarter was
In the fourth quarter of 2022, we generated approximately
(1) | See attached Non-GAAP Financial Information for discussion and reconciliation of non-GAAP financial measures, including free cash flow. |
2023 Fiscal Year Guidance(2):
We expect full year 2023 revenue of approximately
2023 Guidance | ||
Revenue | ||
Gross Margin | 57.5 % | |
Operating Margin | 20.3 % | |
Pro forma Effective Tax Rate | 8.0 % | |
Pro forma EPS |
(2) | All amounts and %'s in the above 2023 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 9, 2023, a cash dividend in the amount of
Dividend Date | Record Date | Dividend Per Share | ||
June 30, 2023 | June 20, 2023 | |||
September 29, 2023 | September 15, 2023 | |||
December 29, 2023 | December 15, 2023 | |||
March 29, 2024 | March 15, 2024 |
In addition, the board has established March 31, 2023 as the payment date and March 15, 2023 as the record date for the final dividend installment of
Webcast Information/Forward-Looking Statements:
The information for Garmin Ltd.'s earnings call is as follows:
When: | Wednesday, February 22, 2023 at 10:30 a.m. Eastern | |
Where: | ||
How: | Simply log on to the web at the address above |
An archive of the live webcast will be available until February 21, 2024 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 2023 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, share repurchase programs, currency movements, expenses, pricing, new product 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 the Annual Report on Form 10-K for the year ended December 31, 2022 filed by Garmin with the Securities and Exchange Commission (Commission file number 001-41118). A copy of Garmin's 2022 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 31, 2022. 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, dēzl, G5000, G3000, GPSMAP, MARQ and Navionics are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Bounce and Enduro 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.
Investor Relations Contact: | Media Relations Contact: | |
Teri Seck | Krista Klaus | |
913/397-8200 | 913/397-8200 | |
Garmin Ltd. and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Income (Unaudited) | ||||||||||||||||
(In thousands, except per share information) | ||||||||||||||||
14-Weeks | 13-Weeks | 53-Weeks | 52-Weeks | |||||||||||||
December 31, | December 25, | December 31, | December 25, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net sales | $ | 1,306,356 | $ | 1,391,589 | $ | 4,860,286 | $ | 4,982,795 | ||||||||
Cost of goods sold | 561,386 | 619,484 | 2,053,511 | 2,092,336 | ||||||||||||
Gross profit | 744,970 | 772,105 | 2,806,775 | 2,890,459 | ||||||||||||
Advertising expense | 57,662 | 61,124 | 168,040 | 171,829 | ||||||||||||
Selling, general and administrative expenses | 204,421 | 190,909 | 775,963 | 721,260 | ||||||||||||
Research and development expense | 215,712 | 204,953 | 834,927 | 778,750 | ||||||||||||
Total operating expenses | 477,795 | 456,986 | 1,778,930 | 1,671,839 | ||||||||||||
Operating income | 267,175 | 315,119 | 1,027,845 | 1,218,620 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 14,306 | 7,005 | 40,826 | 28,573 | ||||||||||||
Foreign currency (losses) gains | 44,535 | (14,642) | (11,274) | (45,263) | ||||||||||||
Other income | 3,860 | 1,355 | 7,577 | 4,866 | ||||||||||||
Total other income (expense) | 62,701 | (6,282) | 37,129 | (11,824) | ||||||||||||
Income before income taxes | 329,876 | 308,837 | 1,064,974 | 1,206,796 | ||||||||||||
Income tax provision | 36,604 | 22,702 | 91,389 | 124,596 | ||||||||||||
Net income | $ | 293,272 | $ | 286,135 | $ | 973,585 | $ | 1,082,200 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 1.53 | $ | 1.49 | $ | 5.06 | $ | 5.63 | ||||||||
Diluted | $ | 1.53 | $ | 1.48 | $ | 5.04 | $ | 5.61 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 191,613 | 192,353 | 192,544 | 192,180 | ||||||||||||
Diluted | 192,104 | 193,306 | 193,042 | 193,043 |
Garmin Ltd. and Subsidiaries | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
(In thousands, except per share information) | ||||||||
December 31, 2022 | December 25, | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,279,194 | $ | 1,498,058 | ||||
Marketable securities | 173,288 | 347,980 | ||||||
Accounts receivable, net | 656,847 | 843,445 | ||||||
Inventories | 1,515,045 | 1,227,609 | ||||||
Deferred costs | 14,862 | 15,961 | ||||||
Prepaid expenses and other current assets | 315,915 | 328,719 | ||||||
Total current assets | 3,955,151 | 4,261,772 | ||||||
Property and equipment, net | 1,147,005 | 1,067,478 | ||||||
Operating lease right-of-use assets | 138,040 | 89,457 | ||||||
Noncurrent marketable securities | 1,208,360 | 1,268,698 | ||||||
Deferred income tax assets | 441,071 | 260,205 | ||||||
Noncurrent deferred costs | 9,831 | 12,361 | ||||||
Goodwill | 567,994 | 575,080 | ||||||
Other intangible assets, net | 178,461 | 215,993 | ||||||
Other noncurrent assets | 85,257 | 103,383 | ||||||
Total assets | $ | 7,731,170 | $ | 7,854,427 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 212,417 | $ | 370,048 | ||||
Salaries and benefits payable | 176,114 | 211,371 | ||||||
Accrued warranty costs | 50,952 | 45,467 | ||||||
Accrued sales program costs | 97,772 | 121,514 | ||||||
Other accrued expenses | 197,376 | 225,988 | ||||||
Deferred revenue | 91,092 | 87,654 | ||||||
Income taxes payable | 246,180 | 128,083 | ||||||
Dividend payable | 139,732 | 258,023 | ||||||
Total current liabilities | 1,211,635 | 1,448,148 | ||||||
Deferred income tax liabilities | 129,965 | 117,595 | ||||||
Noncurrent income taxes payable | 34,627 | 62,539 | ||||||
Noncurrent deferred revenue | 35,702 | 41,618 | ||||||
Noncurrent operating lease liabilities | 114,541 | 70,044 | ||||||
Other noncurrent liabilities | 360 | 324 | ||||||
Stockholders' equity: | ||||||||
Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 191,623 shares outstanding at December 31, 2022; and 192,608 shares outstanding at December 25, 2021 | 17,979 | 17,979 | ||||||
Additional paid-in capital | 2,042,472 | 1,960,722 | ||||||
Treasury stock (6,454 and 5,469 shares, respectively) | (475,095) | (303,114) | ||||||
Retained earnings | 4,733,517 | 4,320,737 | ||||||
Accumulated other comprehensive income (loss) | (114,533) | 117,835 | ||||||
Total stockholders' equity | 6,204,340 | 6,114,159 | ||||||
Total liabilities and stockholders' equity | $ | 7,731,170 | $ | 7,854,427 |
Garmin Ltd. and Subsidiaries | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
53-Weeks | 52-Weeks | |||||||
December 31, | December 25, | |||||||
Operating Activities: | ||||||||
Net income | $ | 973,585 | $ | 1,082,200 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 118,743 | 103,498 | ||||||
Amortization | 45,110 | 51,320 | ||||||
(Gain) loss on sale of property and equipment | (2,083) | 298 | ||||||
Unrealized foreign currency (gains) losses | (5,867) | 36,385 | ||||||
Deferred income taxes | (143,286) | (5,368) | ||||||
Stock compensation expense | 76,801 | 92,522 | ||||||
Realized losses (gains) on marketable securities | 986 | (622) | ||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable, net of allowance for doubtful accounts | 167,336 | (19,106) | ||||||
Inventories | (363,327) | (476,454) | ||||||
Other current and noncurrent assets | 72,185 | (38,004) | ||||||
Accounts payable | (131,268) | 108,946 | ||||||
Other current and noncurrent liabilities | (71,756) | 70,007 | ||||||
Deferred revenue | (2,379) | (7,377) | ||||||
Deferred costs | 3,591 | 8,288 | ||||||
Income taxes | 49,888 | 5,894 | ||||||
Net cash provided by operating activities | 788,259 | 1,012,427 | ||||||
Investing activities: | ||||||||
Purchases of property and equipment | (244,286) | (307,645) | ||||||
Proceeds from sale of property and equipment | 2,402 | 35 | ||||||
Purchase of intangible assets | (1,907) | (1,942) | ||||||
Purchase of marketable securities | (1,051,994) | (1,508,712) | ||||||
Redemption of marketable securities | 1,164,116 | 1,363,070 | ||||||
Acquisitions, net of cash acquired | (13,455) | (20,175) | ||||||
Net cash used in investing activities | (145,124) | (475,369) | ||||||
Financing activities: | ||||||||
Dividends | (679,096) | (491,457) | ||||||
Proceeds from issuance of treasury stock related to equity awards | 62,221 | 35,733 | ||||||
Purchase of treasury stock related to equity awards | (22,730) | (30,985) | ||||||
Purchase of treasury stock under share repurchase plan | (201,012) | — | ||||||
Net cash used in financing activities | (840,617) | (486,709) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (21,449) | (10,254) | ||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (218,931) | 40,095 | ||||||
Cash, cash equivalents, and restricted cash at beginning of year | 1,498,843 | 1,458,748 | ||||||
Cash, cash equivalents, and restricted cash at end of year | $ | 1,279,912 | $ | 1,498,843 |
Garmin Ltd. and Subsidiaries | ||||||||||||||||||||||||||||||||
Net Sales, Gross Profit and Operating Income by Segment (Unaudited) | ||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Auto | ||||||||||||||||||||||||||||||||
Fitness | Outdoor | Aviation | Marine | Total Auto | Consumer Auto | Auto OEM | Total | |||||||||||||||||||||||||
14-Weeks Ended December 31, 2022 | ||||||||||||||||||||||||||||||||
Net sales | $ | 336,553 | $ | 388,259 | $ | 225,251 | $ | 210,614 | $ | 145,679 | $ | 63,206 | $ | 82,473 | $ | 1,306,356 | ||||||||||||||||
Gross profit | 164,496 | 249,079 | 159,858 | 114,723 | 56,814 | 30,952 | 25,862 | 744,970 | ||||||||||||||||||||||||
Operating income (loss) | 39,844 | 132,377 | 62,829 | 42,853 | (10,728) | 1,775 | (12,503) | 267,175 | ||||||||||||||||||||||||
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) | 100,317 | 140,393 | 45,301 | 40,642 | (11,534) | 10,975 | (22,509) | 315,119 | ||||||||||||||||||||||||
53-Weeks Ended December 31, 2022 | ||||||||||||||||||||||||||||||||
Net sales | $ | 1,109,419 | $ | 1,495,167 | $ | 792,799 | $ | 903,983 | $ | 558,918 | $ | 275,108 | $ | 283,810 | $ | 4,860,286 | ||||||||||||||||
Gross profit | 552,417 | 969,810 | 573,063 | 491,457 | 220,028 | 129,598 | 90,430 | 2,806,775 | ||||||||||||||||||||||||
Operating income (loss) | 104,738 | 556,448 | 213,186 | 215,304 | (61,831) | 16,833 | (78,664) | 1,027,845 | ||||||||||||||||||||||||
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) | 359,201 | 476,122 | 193,188 | 249,781 | (59,672) | 48,347 | (108,019) | 1,218,620 |
Garmin Ltd. and Subsidiaries | ||||||||||||||||||||||||
Net Sales by Geography (Unaudited) | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
14-Weeks | 13-Weeks | 53-Weeks | 52-Weeks | |||||||||||||||||||||
December 31, | December 25, | YoY | December 31, | December 25, | YoY | |||||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||
Net sales | $ | 1,306,356 | $ | 1,391,589 | (6) % | $ | 4,860,286 | $ | 4,982,795 | (2) % | ||||||||||||||
Americas | 648,912 | 626,099 | 4 % | 2,429,029 | 2,349,515 | 3 % | ||||||||||||||||||
EMEA | 440,747 | 528,053 | (17) % | 1,633,640 | 1,858,907 | (12) % | ||||||||||||||||||
APAC | 216,697 | 237,437 | (9) % | 797,617 | 774,373 | 3 % | ||||||||||||||||||
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 thousands) | 14-Weeks Ended | 13-Weeks Ended | 53-Weeks Ended | 52-Weeks Ended | ||||||||||||||||||||||||||||
December 31, | December 25, | December 31, | December 25, | |||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||
$ | ETR(1) | $ | ETR(1) | $ | ETR(1) | $ | ETR(1) | |||||||||||||||||||||||||
GAAP income tax provision | $ | 36,604 | 11.1 % | $ | 22,702 | 7.4 % | $ | 91,389 | 8.6 % | $ | 124,596 | 10.3 % | ||||||||||||||||||||
Pro forma discrete tax item: | ||||||||||||||||||||||||||||||||
Switzerland deferred tax assets (2) | (7,168) | — | (7,168) | — | ||||||||||||||||||||||||||||
Pro forma income tax provision | $ | 29,436 | 8.9 % | $ | 22,702 | 7.4 % | $ | 84,221 | 7.9 % | $ | 124,596 | 10.3 % | ||||||||||||||||||||
(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) 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 2022 resulting in |
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) | 14-Weeks | 13-Weeks | 53-Weeks | 52-Weeks | ||||||||||||
December 31, | December 25, | December 31, | December 25, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
GAAP net income | $ | 293,272 | $ | 286,135 | $ | 973,585 | $ | 1,082,200 | ||||||||
Foreign currency gains / losses (1) | (44,535) | 14,642 | 11,274 | 45,263 | ||||||||||||
Tax effect of foreign currency gains / losses (2) | 3,974 | (1,076) | (892) | (4,673) | ||||||||||||
Pro forma discrete tax item (3) | 7,168 | — | 7,168 | — | ||||||||||||
Pro forma net income | $ | 259,879 | $ | 299,701 | $ | 991,136 | $ | 1,122,790 | ||||||||
GAAP net income per share: | ||||||||||||||||
Basic | $ | 1.53 | $ | 1.49 | $ | 5.06 | $ | 5.63 | ||||||||
Diluted | $ | 1.53 | $ | 1.48 | $ | 5.04 | $ | 5.61 | ||||||||
Pro forma net income per share: | ||||||||||||||||
Basic | $ | 1.36 | $ | 1.56 | $ | 5.15 | $ | 5.84 | ||||||||
Diluted | $ | 1.35 | $ | 1.55 | $ | 5.13 | $ | 5.82 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 191,613 | 192,353 | 192,544 | 192,180 | ||||||||||||
Diluted | 192,104 | 193,306 | 193,042 | 193,043 | ||||||||||||
(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 | ||||||||||||||||
(3) The 2022 discrete tax item is discussed in the pro forma effective tax rate section above. |
Free cash flow
Management believes that free cash flow is an important 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) | 14-Weeks | 13-Weeks | 53-Weeks | 52-Weeks | ||||||||||||
December 31, | December 25, | December 31, | December 25, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net cash provided by operating activities | $ | 368,665 | $ | 168,962 | $ | 788,259 | $ | 1,012,427 | ||||||||
Less: purchases of property and equipment | (59,358) | (119,685) | (244,286) | (307,645) | ||||||||||||
Free Cash Flow | $ | 309,307 | $ | 49,277 | $ | 543,973 | $ | 704,782 |
Forward-looking Financial Measures
The forward-looking financial measures in our 2023 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
At this time, management is unable to determine whether or not significant discrete tax items will occur in fiscal 2023 or anticipate the impact of any other events that may be considered in the calculation of non-GAAP financial measures.
Appendix A – Change in operating segments
In January 2023, the Company announced an organization realignment, which combines the consumer auto operating segment with the outdoor operating segment. As a result, beginning with reports filed in the first quarter of fiscal 2023, the Company's operating segments will be fitness, outdoor, aviation, marine, and auto OEM. Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to the revised composition. This change had no effect on the Company's consolidated financial results. The following table provides the relevant recast financial results. The table may not foot due to rounding.
Garmin Ltd. and Subsidiaries | ||||||||||||||||||||||||
Net Sales, Gross Profit and Operating Income by Segment (Unaudited) | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Fitness | Outdoor | Aviation | Marine | Auto OEM | Total | |||||||||||||||||||
52-Weeks Ended December 25, 2021 | ||||||||||||||||||||||||
Net sales | $ | 1,533,788 | $ | 1,606,664 | $ | 712,468 | $ | 875,151 | $ | 254,724 | $ | 4,982,795 | ||||||||||||
Gross profit | 813,325 | 988,662 | 519,821 | 495,310 | 73,341 | 2,890,459 | ||||||||||||||||||
Operating income (loss) | 359,201 | 524,469 | 193,188 | 249,781 | (108,019) | 1,218,620 | ||||||||||||||||||
13-Weeks Ended March 26, 2022 | ||||||||||||||||||||||||
Net sales | $ | 220,896 | $ | 449,734 | $ | 174,766 | $ | 254,069 | $ | 73,197 | $ | 1,172,662 | ||||||||||||
Gross profit | 106,189 | 278,455 | 127,543 | 128,581 | 21,711 | 662,479 | ||||||||||||||||||
Operating income (loss) | 580 | 152,810 | 40,127 | 58,882 | (23,843) | 228,556 | ||||||||||||||||||
13-Weeks Ended June 25, 2022 | ||||||||||||||||||||||||
Net sales | $ | 272,095 | $ | 462,243 | $ | 204,739 | $ | 242,794 | $ | 58,962 | $ | 1,240,833 | ||||||||||||
Gross profit | 134,016 | 290,508 | 147,931 | 137,406 | 18,965 | 728,826 | ||||||||||||||||||
Operating income (loss) | 23,462 | 163,371 | 61,745 | 68,619 | (24,457) | 292,740 | ||||||||||||||||||
13-Weeks Ended September 24, 2022 | ||||||||||||||||||||||||
Net sales | $ | 279,875 | $ | 406,832 | $ | 188,043 | $ | 196,506 | $ | 69,178 | $ | 1,140,434 | ||||||||||||
Gross profit | 147,716 | 250,412 | 137,732 | 110,747 | 23,892 | 670,499 | ||||||||||||||||||
Operating income (loss) | 40,850 | 122,947 | 48,487 | 44,950 | (17,861) | 239,373 | ||||||||||||||||||
14-Weeks Ended December 31, 2022 | ||||||||||||||||||||||||
Net sales | $ | 336,553 | $ | 451,465 | $ | 225,251 | $ | 210,614 | $ | 82,473 | $ | 1,306,356 | ||||||||||||
Gross profit | 164,496 | 280,031 | 159,858 | 114,723 | 25,862 | 744,970 | ||||||||||||||||||
Operating income (loss) | 39,844 | 134,152 | 62,829 | 42,853 | (12,503) | 267,175 | ||||||||||||||||||
53-Weeks Ended December 31, 2022 | ||||||||||||||||||||||||
Net sales | $ | 1,109,419 | $ | 1,770,275 | $ | 792,799 | $ | 903,983 | $ | 283,810 | $ | 4,860,286 | ||||||||||||
Gross profit | 552,417 | 1,099,408 | 573,063 | 491,457 | 90,430 | 2,806,775 | ||||||||||||||||||
Operating income (loss) | 104,738 | 573,281 | 213,186 | 215,304 | (78,664) | 1,027,845 |
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SOURCE Garmin Ltd.
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